REG - Restaurant Group PLC - Half-year Report <Origin Href="QuoteRef">RTN.L</Origin> - Part 2
26/08/2016 07:06
- Part 2: For the preceding part double click ID:nRSZ1890Ia
The comparatives for the full year ended 27 December 2015 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.
Going concern
Despite the Group's challenging trading performance in the first half of the
year, the Company is profitable, highly cash generative and retains a strong
balance sheet. Potential risk factors and uncertainties that could affect the
business are discussed in the Chairman's statement. The Group has a debt
facility of £140m which was renewed on 8 June 2015 and now matures in June
2020. As at 3 July 2016 the Group had drawn down £43m of this facility and
had net debt of £35.6m. Based on the Group's plans for the next 12 months and
after making enquiries (including preparation of reasonable trading forecasts,
consideration of current financing arrangements and current headroom for
liquidity and covenant compliance), the Directors have a reasonable
expectation that the Group has adequate resources to continue operations for
the foreseeable future. For this reason they continue to adopt the going
concern basis in preparing the condensed financial statements.
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.
There have been no changes to the accounting standards in the current year
that have materially impacted the Group financial statements.
Notes to the condensed financial statements
1 Segmental analysis
The Group trades in one business segment (that of operating restaurants) and
one geographical segment (being the United Kingdom). The Group's brands meet
the aggregation criteria set out in paragraph 22 of IFRS 8 'Operating
Segments' and as such the Group reports the business as one reportable
segment.
2 Exceptional items
27 weeks ended 3 July 2016 26 weeks ended 28 June 2015 52 weeks ended 27 December 2015
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Provision for onerous leases and other costs (16,851) - -
Impairment of fixed assets (40,280) - -
Gross loss (i) (57,131) - -
Restructuring and strategic review costs (ii) (2,009) - -
Operating loss (59,140) - -
Tax (iii) 8,178 - 1,488
Net (loss) / profit (50,962) - 1,488
(i) In the 27 weeks ended 3 July 2016, the Group has recorded a charge
of £57.1m for the exit costs of 33 underperforming sites which do not generate
adequate levels of return and the impairment of a further 29 sites. The
£57.1m includes £40.3m fixed asset impairment and £16.9m provision for onerous
leases and other costs.
(ii) In the 27 weeks ended 3 July 2016 the Group has recorded a charge
of £2.0m for the Board and management restructuring and the strategic review
costs.
(iii) In the 27 weeks the Group has recognised a £8.2 tax credit in
relation to exceptional items (26 weeks ended 28 June 2015: £nil, 52 weeks
ended 27 December 2015: £1.5m tax credit in relation to revaluation of the
deferred tax liability).
3 Tax
The underlying tax charge has been calculated by reference to the expected
effective current and deferred tax rates for the full financial year to 1
January 2017 applied against the trading profit before tax for the period
ended 3 July 2016. The full year effective tax rate on the underlying profit
(before exceptional items) is estimated to be 22.1% (2015: 22.4%).
The Finance (No.2) Act 2015 introduced a reduction in the main rate of the
corporation tax from 20% to 19% from April 2017 and from 19% to 18% from April
2020. These reductions were substantially enacted on 24 October 2015 and
therefore the deferred tax provision at the balance sheet date has been
calculated using these rates.
4 Earnings per share
27 weeks ended 03 July 2016 26 weeks ended 28 June 2015 52 weeks ended 27 December 2015
Earnings Weighted average number of shares Per-share amount Earnings Weighted average number of shares Per-share amount Earnings Weighted average number of shares Per-share amount
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited)
£'000 millions pence £'000 millions pence £'000 millions pence
Basic earnings per share (22,420) 200.1 (11.20) 28,671 200.7 14.29 68,886 199.4 34.55
Effect of dilutive options - 0.0 0.00 - 0.5 (0.04) - 0.5 (0.08)
Shares held by employee benefit trust - 0.9 0.05 - - - - 1.3 (0.23)
Diluted earnings per share (22,420) 201.0 (11.15) 28,671 201.2 14.25 68,886 201.2 34.24
Basic earnings per share (22,420) 200.1 (11.20) 28,671 200.7 14.29 68,886 199.4 34.55
Effect of exceptional items 50,962 - 25.46 - - - (1,488) - (0.75)
Earnings per share - trading business 28,542 200.1 14.26 28,671 200.7 14.29 67,398 199.4 33.80
5 Dividends
Following approval at the Annual General Meeting on 12 May 2016, the final
dividend in respect of 2015 of 10.60p per share, totalling £21.2m, was paid to
shareholders on 6 July 2016.
The Directors have declared an interim dividend of 6.8p per share which will
be paid on 13 October 2016 to ordinary shareholders on the register at close
of business on 16 September 2016. In accordance with IAS 10, this will be
recognised in the reserves of the Group in the second half of the year.
6 Reconciliation of profit before tax to cash generated from operations
27 weeks ended 3 July 2016 26 weeks ended 28 June 2015 52 weeks ended 27 December 2015
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit before tax (22,499) 36,947 86,845
Net finance charges 883 1,139 2,046
Impairment 40,280 - -
Provision for onerous leases and other costs 18,860
Share-based payments (265) 1,310 2,900
Depreciation 22,071 19,331 39,100
Decrease / (increase) in stocks 1,060 684 (859)
Decrease / (increase) in debtors 4,705 100 (5,633)
(Decrease) / increase in creditors (4,205) 464 9,233
Cash generated from operations 60,890 59,975 133,632
7 Bank loans
The Group has a committed bank facility of £140m in place until June 2020.
During the 27 weeks ended 3 July 2016, the Group increased its draw down under
this facility by £11.0m (26 weeks ended 28 June 2015: reduction of £15.0m, 52
weeks ended 27 December 2015: reduction of £8.0m).
8 Share capital
Share capital at 3 July 2016 amounted to £56.5m. The number of shares
authorised, issued and fully paid increased from 200,950,672 to 201,063,645 in
the period following the exercise of share options by employees, amounting to
112,373 shares.
9 Related party transactions
There were no related party transactions in the 27 weeks ended 3 July 2016.
10 Contingent liabilities
There were no significant changes in the nature and size of contingent
liabilities at 3 July 2016 to those reported in the Annual Report and Accounts
for the 52 weeks ended 27 December 2015.
INDEPENDENT REVIEW REPORT TO THE RESTAURANT GROUP PLC
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 3 July
2016 which comprises the consolidated income statement, the consolidated
statement of changes in equity, the consolidated balance sheet, the
consolidated cash flow statement and related notes 1 to 10. 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 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. Our work has been undertaken so that
we might state to the company those matters we are required to state to it in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our review 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 and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in the accounting policies, 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 inquiries, 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 Ireland) 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 3 July 2016 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, UK
26 August 2016
This information is provided by RNS
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