REG - Restaurant Group PLC - Final Results <Origin Href="QuoteRef">RTN.L</Origin> - Part 2
08/03/2017 07:06
- Part 2: For the preceding part double click ID:nRSH7920Ya
£'000 £'000
Cost of sales consists of the following:
Continuing business excluding pre-opening costs 594,756 553,106
Pre-opening costs 3,380 5,385
Trading cost of sales 598,136 558,491
Exceptional charge 109,732 -
Total cost of sales for the year 707,868 558,491
2016 2015
Profit for the year has been arrived at after charging / (crediting): £'000 £'000
Depreciation 41,809 39,100
Impairment 68,050 -
Purchases 144,467 142,325
Staff costs (see note 4) 239,297 225,642
Minimum lease payments 74,616 67,009
Contingent rents 10,906 9,607
Total operating lease rentals of land and buildings 85,522 76,616
Rental income (2,260) (2,688)
Net rental costs 83,262 73,928
4 Exceptional items
2016 2015
Exit sites Impaired sites Other Total Total
£'000 £'000 £'000 £'000 £'000
Impairment of fixed assets 26,585 41,465 - 68,050 -
Void period costs and onerous leases 27,629 7,218 - 34,847 -
Other exceptional costs 4,173 2,662 6,944 13,779 -
58,387 51,345 6,944 116,676 -
Credit in respect of tax rate change - - (261) (261) (1,488)
Tax effect of exceptional Items (8,142) (7,219) (783) (16,144) -
(8,142) (7,219) (1,044) (16,405) (1,488)
50,245 44,126 5,900 100,271 (1,488)
The Group has recorded a charge of £58.4m for the exit costs of 33 underperforming sites, and a further eight underperforming units which we intend to exit in the short-term as we do not believe that these sites are capable of generating adequate returns. The Group has also made an impairment charge of £51.3m against 66 sites, as required by IAS 36, which, owing to poor trading performance, are unlikely to generate sufficient cash in the future to justify their book value.
Furthermore, the Group has recorded a charge of £5.1m for the Board and management restructuring and strategic review costs, together with an accelerated charge of £1.8m in respect of the cancellation by savers of options for the 2014 & 2015 Save as You Earn schemes.
The Group has recognised a £16.4m tax credit in relation to these exceptional items (52 weeks ended 27 December 2015: £1.5m tax credit in relation to revaluation of the deferred tax liability).
5 Net finance charges 2016 2015
£'000 £'000
Bank interest payable 834 1,075
Other interest payable 465 334
Facility fees 387 338
Interest on obligations under finance leases 387 381
Total borrowing costs 2,073 2,128
Bank interest receivable (5) (9)
Other interest receivable (8) (13)
Loan note interest receivable (53) (60)
Total interest receivable (66) (82)
Net finance charges 2,007 2,046
6 Tax
Trading 2016 Exceptional 2016 Total 2016 Total 2015
a) The tax charge comprises: £'000 £'000 £'000 £'000
Current tax
UK corporation tax at 20.0% (2015: 20.25%) 17,011 (8,014) 8,997 19,624
Adjustments in respect of previous years (116) - (116) (525)
16,895 (8,014) 8,881 19,099
Deferred tax
Origination and reversal of temporary differences 27 - 27 24
Adjustments in respect of previous years 121 - 121 324
Credit in respect of rate change on deferred tax liability - (261) (261) (1,488)
Credit in respect of fixed asset write downs and disposals - (8,130) (8,130) -
148 (8,391) (8,243) (1,140)
Total tax charge for the year 17,043 (16,405) 638 17,959
b) Factors affecting the tax charge for the year
The tax charged for the year varies from the standard UK corporation tax rate of 20.0% (2015: 20.25%) due to the following factors:
Trading 2016 Exceptional 2016 2016 2015
£'000 £'000 £'000 £'000
Profit/(loss) on ordinary activities before tax 77,149 (116,676) (39,527) 86,845
Profit/(loss) on ordinary activities before tax multiplied
by the standard UK corporation tax rate of 20.0% (2015: 20.25%) 15,430 (23,335) (7,905) 17,586
Effects of:
Depreciation/impairment on non-qualifying assets 1,868 4,765 6,633 1,960
Expenses / (income) not deductible for tax purposes 621 2,616 3,237 103
Credit in respect of rate change on deferred tax liability - (261) (261) (1,488)
Adjustment in respect of previous years (876) (190) (1,066) (202)
Total tax charge for the year 17,043 (16,405) 638 17,959
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 and 20% for the 53 weeks to 01 January 2017.
The Finance (No.2) Act 2015 introduced a reduction in the main rate of corporation tax from 20% to 19% from April 2017 and from 19% to 18% from April 2020. These reductions were substantively enacted on 26 October 2015.
The Finance Act 2016 introduced a further reduction in the main rate of corporation tax to 17% from April 2020. This was substantively enacted on 06 September 2016. The deferred tax provision at the balance sheet date has been calculated at this rate, resulting in a £0.3m tax credit.
7 Earnings per share 2016 2015
a) Basic earnings per share:
Weighted average ordinary shares for the purposes of basic earnings per share 200,230,299 199,408,183
Total (loss)/profit for the year (£'000) (40,165) 68,886
Basic earnings per share for the year (pence) (20.06) 34.55
Total (loss)/profit for the year (£'000) (40,165) 68,886
Effect of exceptional items on earnings for the year (£'000) 100,271 (1,488)
Earnings excluding exceptional items (£'000) 60,106 67,398
Adjusted earnings per share (pence) 30.02 33.80
b) Diluted earnings per share:
Weighted average ordinary shares for the purposes of basic earnings per share 200,230,299 199,408,183
Effect of dilutive potential ordinary shares:
Dilutive shares to be issued in respect of options granted under the share option schemes 404,829 488,349
Shares held by employee benefit trust 814,855 1,262,608
201,449,983 201,159,140
Diluted earnings per share (pence) (20.06) 34.24
Adjusted diluted earnings per share (pence) 29.84 33.50
The additional non-statutory earnings per share information (where exceptional items, described in note 5, have been added back) has been provided as the Directors believe it provides a useful indication as to the underlying performance of the Group.
Diluted earnings per share information is based on adjusting the weighted average number of shares for the purposes of basic earnings per share in respect of notional share awards made to employees in regards of share option schemes and the shares held by the employee benefit trust.
8 Dividend
2016 2015
£'000 £'000
Amounts recognised as distributions to equity holders during the year:
Final dividend for the 52 weeks ended 27 December 2015 of 10.60p (2014: 9.30p) per share 21,237 18,550
Interim dividend for the 53 weeks ended 01 January 2017 of 6.80p (2015: 6.80p) per share 13,625 13,565
Total dividends paid in the year 34,862 32,115
Proposed final dividend for the 53 weeks ended 01 January 2017 of 10.60p (2015 actual proposed and paid: 10.60p) per share 21,240 21,176
9 Property, plant and equipment
Fixtures,
Land and equipment
buildings and vehicles Total
£'000 £'000 £'000
Cost
At 29 December 2014 447,403 162,940 610,343
Additions 50,842 23,975 74,817
Disposals (8,360) (5,079) (13,439)
At 27 December 2015 489,885 181,836 671,721
Accumulated depreciation and impairment
At 29 December 2014 141,547 100,220 241,767
Provided during the year 20,848 18,252 39,100
Impairment - - -
Disposals (7,869) (4,917) (12,786)
At 27 December 2015 154,526 113,555 268,081
Cost
At 28 December 2015 489,885 181,836 671,721
Additions 38,445 16,558 55,003
Disposals (6,536) (6,801) (13,337)
At 01 January 2017 521,794 191,593 713,387
Accumulated depreciation and impairment
At 28 December 2015 154,526 113,555 268,081
Provided during the year 22,533 19,276 41,809
Impairment 54,807 13,243 68,050
Disposals (3,991) (6,514) (10,505)
At 01 January 2017 227,875 139,560 367,435
Net book value as at 28 December 2015 335,360 68,281 403,640
Net book value as at 01 January 2017 293,919 52,033 345,952
10 Provisions 2016 2015
£'000 £'000
Provision for onerous lease contracts 19,853 2,714
Provision for property exit costs 24,117 952
Balance at the end of the year 43,970 3,666
Analysed as:
Amount due for settlement within one year 16,391 1,130
Amount due for settlement after one year 27,579 2,536
43,970 3,666
Onerous lease contracts Property exit costs Total
£'000 £'000 £'000
Balance at 28 December 2015 2,714 952 3,666
Additional provisions made 18,197 30,221 48,418
Amounts utilised (1,161) (6,831) (7,992)
Provisions released (5) (225) (230)
Adjustment for change in discount rate (337) - (337)
Unwinding of discount 445 - 445
Balance at 1 January 2017 19,853 24,117 43,970
The provision for onerous contracts is in respect of lease agreements and covers the element of expenditure over the life of those contracts which are considered onerous, expiring in 1 to 30 years.
The provision for property exit costs includes the costs of strip out and dilapidations and the costs expected to be incurred over the void period until the property is sublet. In addition, this includes a provision for other committed costs arising from the strategic exit project.
11 Reconciliation of profit before tax to cash generated from operations
2016 2015
£'000 £'000
(Loss)/profit before tax (39,527) 86,845
Net finance charges 2,007 2,046
Impairment (non cash) 68,050 -
Provision for future lease and other costs 46,860 -
Share-based payments 1,323 2,900
Depreciation 41,809 39,100
Decrease / (increase) in stocks 757 (859)
Increase in debtors (5,973) (5,633)
Increase in creditors 6,842 9,233
Cash generated from operations 122,148 133,632
12 Reconciliation of changes in cash to the movement in net debt 2016 2015
£'000 £'000
Net debt:
At the beginning of the year (28,382) (38,578)
Movements in the year:
(Proceeds from) / repayments of loan draw downs (7,000) 8,000
Non-cash movements in the year (355) 931
Cash inflow / (outflow) 7,423 1,265
At the end of the year (28,314) (28,382)
Represented by: At 29 Cash flow Non-cash At 27 & 28 Cash flow Non-cash At 01
December movements movements December movements movements January
2014 in the year in the year 2015 in the year in the year 2017
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 880 2,103 - 2,983 6,585 - 9,568
Overdraft - (838) - (838) 838 - -
Bank loans falling due after one year (39,458) 8,000 931 (30,527) (7,000) (355) (37,882)
(38,578) 9,265 931 (28,382) 423 (355) (28,314)
13 Basis of preparation
The Group's preliminary announcement and statutory accounts in respect of 2016
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 1 January 2017 or 27 December 2015 but is derived from those accounts.
Statutory accounts for 2015 have been delivered to the Registrar of Companies
and those for 2016 will be delivered following the Company's Annual General
Meeting. The 2016 statutory accounts are prepared on the basis of the
accounting policies stated in the 2015 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.
This information is provided by RNS
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