REG - Restaurant Group PLC - Half Yearly Report <Origin Href="QuoteRef">RTN.L</Origin> - Part 1

RestaurantAnnouncement

28/08/2015 07:01

RNS Number : 3756X
Restaurant Group PLC
28 August 2015

Interim results for the 26 weeks ended 28 June 2015
28 August 2015
Strong trading performance across all brands with good growth in turnover, profit and margins:
- Total revenue increased 8% to 334m (2014: 308m)
- Like-for-like sales increased by 2.5% 
- Operating profit margins increased by 10bps
- EBITDA increased by 8% to 57.4m (2014: 53.2m)
- Profit before tax increased by 10% to 36.9m (2014: 33.7m)
- EPS rose 12% to 14.3p (2014: 12.8p)
- Operating cash flow of 60.0m (2014: 55.9m) 
 Interim dividend increased by 11.5% to 6.8p per share (2014: 6.1p) 
 Accelerating new site development: 
- 12 new sites opened in the first half
- A further 9 new sites opened so far in the second half
- 43-48 new sites expected for 2015
 Year to date like-for-like sales for the 34 weeks to 23 August 2015 up 2%
 Board is confident of another year of good progress in 2015
 
Danny Breithaupt, Chief Executive of The Restaurant Group plc commented as follows:
"The Restaurant Group has delivered another strong set of results, with good growth across all key performance measures and excellent progress on our strategy of increasing the pace of roll out in a more balanced way between our brands.
These results reflect the hard work that has gone in to driving the continued evolution of the Group and I would like to record my thanks to our teams across the country for delivering another excellent performance.
The strengthening UK economy, increasing wages and disposable incomes, combined with the secular trends driving ongoing expansion of the eating out market, give me great confidence that TRG is well set for continued strong growth this year and beyond."
28 August 2015
Enquiries:
The Restaurant Group
Danny Breithaupt, Chief Executive Officer

Stephen Critoph, Chief Financial Officer
020 3117 5001 


Instinctif Partners

Matthew Smallwood
020 7457 2020
Chairman's statement
Introduction
I am pleased to report that the Group has traded strongly during the first six months of the year with good growth in turnover, profits and margins. Total sales in the first half grew by 8.4%, like-for-like sales were 2.5% ahead of the prior year and Group profit before tax was up 10%.
For the 34 weeks to 23 August like-for-like sales are up 2%. We are pleased with performance over the last two months, set against a period of very strong trading during July and August last year.
During the first six months of the year we opened 12 new restaurants. In July and August we opened a furtherninebringing the total number of new sites opened so far this year to21. The programme for the balance of the year is very well advanced and we expect to open a total of between 43and 48 restaurants for the year as a whole.
Trading results 
During the first half of the year the Group made good progress on all thekeymetrics.Total revenue was up by 8.4% to 333.8m, EBITDA grew by 7.9% to 57.4m, operating profit rose by 9.3% to 38.1m and profit before tax increased by 9.6% to 36.9m. Earnings per share were up 11.7% to 14.3p, benefitting from a lower tax rate.There is no doubt that trading conditions in the year so far have been tough but these results once again demonstrate the resilience of the Group's business.
During the first halfwe made further progress on margins, with Group operating margin for the first half increasing by 10 basis points to 11.4%. Since the autumn of 2014 we have seenhigher levels of wage cost inflationandwe have also increased investment inthe Head Office structure to support our growth. However these cost pressures have been more than offset bythe benefits ofoperational efficiencies and minimal food cost inflation, resulting in the margin expansion referred to above.
We note the recently announced Government plans to introduce the Living Wage from April 2016, effectively a new tier of National Minimum Wage for those aged 25 and over. Whilst this will clearly have some cost implications, we are actively taking steps to mitigate the impact with our continued focus on operational efficiencies.
Interim dividend
As a result of thestrongfinancialperformance the Board is declaring an interim dividend of6.8p per share, an increase of 11.5%on the prior year. The interim dividend will be paid on 8 October 2015 to shareholders on the register on 11 September 2015 and shareswill be marked ex dividend on 10 September 2015.
Frankie & Benny's(251 units)
Frankie & Benny's traded well during the first half delivering good growth in turnover and profits combined with some margin improvements. During the first half we opened four new Frankie & Benny's restaurants, with a furthertwoopeningsince the end of June. Thesenew sitesare all performing well and are set to deliver strong returns.We expect to open a total of 13to 15new Frankie & Benny's restaurantsin the fullyear.
Frankie and Benny's has broad appeal, particularly among families. Service and value are important drivers within this market and we have worked hard in 2015 to ensure we remain ahead of the competition on these issues. The 'Family Matters' program, which represents a step change in service culture, launched across all sites at the beginning of the year. Both this and our Red Sauce Revolution menu implemented in August have been designed to deliver further long-term improvements in performance. We believe that both of these significant developments will ensure this brand is well positioned for growth both now and long into the future.
Chiquito (79 units)
The rejuvenation of the Chiquito brand, which started some two years ago, hascontinuedapace.DuringH1Chiquito recordedthe strongest growth in both sales and profits of all our brands. We opened one new Chiquito during the first half, have openedthreesubsequently and expect to open atotal of 8 to 10 in the full year.We are extremely pleased with theperformance ofrecent openings,all of which are set to deliver strong returns. Majorrecentareas of focus include the development of the breakfast, dessert and cocktail offerings, all of which are contributing to strong sales growth. We are confident that Chiquito will become an increasingly important part of TRG's success going forward and that it will further strengthen its position as a market leader in its sector.
Coast to Coast (13 units)
Coast to Coast is now a well-established part of the TRG brand portfolio and has delivered a strong financial performance. Although we did not open any new Coast to Coast restaurants during the first half of the year, we have subsequently opened inthreenew locations. Twoofthese sites(Aberdeen and Northampton) sit alongside existingsuccessful TRG units. The third new Coast to Coast opening is in Chestercitycentre. We believe Coast to Coast has the diversity of appeal to operate in multiple location types, as evidenced by the successful Birmingham city centre opening last year.The strong performance of our openings gives us great confidence in the future of this brand and that Coast to Coast will become an increasingly significant part of The Restaurant Group's success and diversification over time.
Pubs (53 units) 
Our Pub restaurant business had an excellent first half with strong growth in turnover and profitability.In the first half we opened one new pub and we expect to open a total of 3 to 4 in the full year.We have a well-established model for our Pub business which is scalable and capable of delivering sustained high levels of return on investment. Over the last nine months we have deliberately strengthened the team in several areas to support the acceleration of new pub openings. The Pub businesshas now reachedthescale at which it helps with diversification, trading well through hot summer months and providing good balance to the TRG portfolio. This business will only get better going forward as we acceleratethepace of new openings over the next few years.
Concessions (60 units)
The Concessions business tradedstronglyduring the first half with good growth in turnover, margins and profits. During the first half we opened five new units, including a very strong rosterof three outlets in the re-developed Stansted departures lounge, and our first airside unit at Birmingham Airport. We expect to open at least two more units in the balance of the year, making a total of at least seven new openings for the full year. This business continues to be a real success story for TRG. Our focus on concept development and customer service levels continues to generate levels of sales growth ahead ofUKpassenger growth numbers and excellent returns on investment. With a stronger economic outlook we expect to see travel hubs become busier in the coming years and we are well positioned to take advantage of this going forward.
Cash flow & balance sheet
Cash generation during the first half was once again extremely strong with netcash flow from operations of 60m.Free cash flow (after interest, tax and maintenance expenditure) of44m represents an increase ofover 20% on the comparable period last year. The strong conversion of operating profits into cash, combined with highreturns on investment from new site openings, means that we can open an increasing number of new sites while at the same time continuing to increase the level of dividend payment each year. As will be noted from the cash flow of the Group overrecentyears, theincreasing levelsofnew site openings anddividend have been entirely financed out of internally generated cash flow.
During the first, half total capital expenditure was 21.2m. This comprised 14.4m of development expenditure on new sites and 6.8m on maintenance and refurbishment investment.Thetotal level of capex during the first half was somewhat lower than during the comparable period last year, primarily due to the slightly lower level of new openings. However, by the year end, we expect total capital expenditure to be higher than the prior year, in the range of 75m to 80m, reflecting an increase in the number of new restaurants we will have opened by the end of the year.
In June we finalised a five year extension of our 140m debt facility, so that we now have secure funding in place until June 2020.
Outlook
Danny Breithaupt has now completed his first full year as CEO of the Group. I am delighted with the progress that has been made under his leadership both financially and culturally within the business, as clearly evidenced by these results which represent an outperformance against our sector. 
The Group benefits from operatinginmarket segments with barriers to entry and excellent growth prospects which have proved to be resilient over many years. We have a strong portfolio of complementary brands and an impressive pipeline of new sites in terms of both quality and quantity. We also have a focussed senior management team which has been strengthened and reenergised over the last 12 months. All of these factors mean that the Group is now well positioned to deliver on the strategy of doubling in size with a more balanced portfolio over the next 8 to 10 years.
With continuingimprovements in the UK economy, a strong pipeline of new sites and an exciting cinema release schedule, I am confident that the Group will continue to make excellent and profitable progress both in this year and future years.
Alan Jackson
Chairman
28 August 2015
Notes to the Chairman's statement
1. The Restaurant Group plc ("TRG" or "the Group") operates over 480 restaurants and pub restaurants across the UK. Its principal trading brands are Frankie & Benny's, Chiquito and Coast to Coast. In addition it operates a Pub restaurant business and a Concessions business which trades principally at UK airports.
2. 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 25 of our latest Annual Report and Accounts which can be found on the Group website: www.trgplc.com/recent-announcements.
3. Summary trading income statement:

26 weeks ended 28 June 2015
26 weeks ended 29 June 2014


m
m
% change
Revenue
333.8
307.9
8.4%
Cost of sales
(274.3)
(254.3)

Pre-opening costs
(1.6)
(1.4)





Gross profit
57.9
52.2
10.9%
Administration costs
(19.8)
(17.3)





EBITDA
57.4
53.2
7.9%
Depreciation
(19.3)
(18.3)





Operating profit
38.1
34.9
9.3%
Operating margin
11.4%
11.3%

Net interest
(1.2)
(1.2)





Profit before tax
36.9
33.7
9.6%
Tax
(8.2)
(8.0)





Profit after tax
28.7
25.7
11.7%




EPS (pence)
14.29
12.80
11.7%
4. Summary cash flow statement




26 weeks ended 28 June 2015
26 weeks ended 29 June 2014




m
m
Operating profit

38.1 
34.9 
Working capital and non-cash adjustments

2.6 
2.7 
Depreciation

19.3 
18.3 






Net cash flow from operations

60.0 
55.9 






Interest paid

(0.7)
(0.6)
Tax paid


(8.2)
(9.2)
Maintenance capital expenditure

(6.8)
(10.3)






Free cash flow

44.3 
35.8 






New build capital expenditure

(14.4)
(19.5)
Movement in capital creditors

(8.7)
(6.3)
Repayment of LV loan note

-
7.0 
Purchase of shares for EBT

(1.7)
(5.3)
Other items

1.1 
0.9 






Changes in net debt

20.6 
12.6 






Net bank debt at start of period

(38.6)
(41.9)
Net bank debt at end of period

(18.0)
(29.3)
The Restaurant Group plc Interim report 2015



Condensed financial statements




Consolidated income statement

26 weeks ended 28 June 2015


Trading
Non-



business
trading
Total


(unaudited)
(unaudited)
(unaudited)

Note
'000
'000
'000





Revenue

333,780
-
333,780





Cost of sales:




Excluding pre-opening costs

(274,325)
-
(274,325)
Pre-opening costs

(1,602)
-
(1,602)


(275,927)
-
(275,927)





Gross profit

57,853
-
57,853





Administration costs

(19,767)
-
(19,767)





Trading profit

38,086
-
38,086





Disposal of investment in associate
2
-
-
-





Earnings before interest, tax, depreciation and amortisation:

57,417
-
57,417





Depreciation

(19,331)
-
(19,331)





Operating profit

38,086
-
38,086





Interest payable

(1,173)
-
(1,173)
Interest receivable

34
-
34





Profit on ordinary activities before tax

36,947
-
36,947





Tax on profit from ordinary activities
3
(8,276)
-
(8,276)





Profit for the period

28,671
-
28,671










Earnings per share (pence)




Basic
4
14.29

14.29
Diluted
4
14.25

14.25
Consolidated income statement

26 weeks ended 29 June 2014


Trading
Non-



business
trading
Total


(unaudited)
(unaudited)
(unaudited)

Note
'000
'000
'000





Revenue

307,910
-
307,910





Cost of sales:




Excluding pre-opening costs

(254,340)
-
(254,340)
Pre-opening costs

(1,420)
-
(1,420)


(255,760)
-
(255,760)





Gross profit

52,150
-
52,150





Administration costs

(17,290)
(138)
(17,428)





Trading profit

34,860
(138)
34,722





Disposal of investment in associate
2
-
7,000
7,000





Earnings before interest, tax, depreciation and amortisation:

53,210
6,862
60,072





Depreciation

(18,350)
-
(18,350)





Operating profit

34,860
6,862
41,722





Interest payable

(1,216)
-
(1,216)
Interest receivable

64
-
64





Profit on ordinary activities before tax

33,708
6,862
40,570





Tax on profit from ordinary activities
3
(8,031)
30
(8,001)





Profit for the period

25,677
6,892
32,569










Earnings per share (pence)




Basic
4
12.80

16.23
Diluted
4
12.78

16.21
Consolidated income statement

52 weeks ended 28 December 2014


Trading
Non-



business
trading
Total


(audited)
(audited)
(audited)

Note
'000
'000
'000





Revenue

635,225
-
635,225





Cost of sales:




Excluding pre-opening costs

(516,623)
-
(516,623)
Pre-opening costs

(4,702)
-
(4,702)


(521,325)
-
(521,325)





Gross profit

113,900
-
113,900





Administration costs

(33,450)
(138)
(33,588)





Trading profit

80,450
(138)
80,312





Disposal of investment in associate
2
-
7,000
7,000





Earnings before interest, tax, depreciation and amortisation:

116,972
6,862
123,834





Depreciation

(36,522)
-
(36,522)





Operating profit

80,450
6,862
87,312





Interest payable

(2,488)
-
(2,488)
Interest receivable

103
-
103





Profit on ordinary activities before tax

78,065
6,862
84,927





Tax on profit from ordinary activities
3
(17,958)
30
(17,928)





Profit for the period

60,107
6,892
66,999










Earnings per share (pence)




Basic
4
29.96

33.39
Diluted
4
29.92

33.35
Consolidated statement of changes in equity












Share
Share
Other
Retained
Total


capital
premium
reserves
earnings



'000
'000
'000
'000
'000








Balance at 29 December 2014
56,433
24,495
(11,971)
175,567
244,524








Profit for the period
-
-
-
28,671
28,671

Issue of new shares
1
8
-
-
9

Dividends
-
-
-
-
-

Share-based payments - credit to equity
-
-
1,310
-
1,310

Employee benefit trust - purchase of shares
-
-
(1,746)
-
(1,746)

Other reserve movements
-
-
(261)
-
(261)

Current tax on share-based payments taken directly to equity
-
-
-
674
674

Deferred tax on share-based payments taken directly to equity
-
-
-
(219)
(219)








Balance at 28 June 2015 (unaudited)
56,434
24,503
(12,668)
204,693
272,962















Balance at 30 December 2013
56,432
24,491
(8,940)
143,982
215,965








Profit for the period
-
-
-
32,569
32,569

Issue of new shares
-
-
-
-
-

Dividends
-
-
-
-
-

Share-based payments - credit to equity
-
-
1,522
-
1,522

Employee benefit trust - purchase of shares
-
-
(5,272)
-
(5,272)

Other reserve movements
-
-
(386)
-
(386)

Current tax on share-based payments taken directly to equity
-
-
-
1,024
1,024

Deferred tax on share-based payments taken directly to equity
-
-
-
(446)
(446)








Balance at 29 June 2014 (unaudited)
56,432
24,491
(13,076)
177,129
244,976















Balance at 30 December 2013
56,432
24,491
(8,940)
143,982
215,965








Profit for the year
-
-
-
66,999
66,999

Issue of new shares
1
4
-
-
5

Dividends
-
-
-
(36,367)
(36,367)

Share-based payments - credit to equity
-
-
2,795
-
2,795

Employee benefit trust - purchase of shares
-
-
(5,272)
-
(5,272)

Other reserve movements
-
-
(554)
-
(554)

Current tax on share-based payments taken directly to equity
-
-
-
1,474
1,474

Deferred tax on share-based payments taken directly to equity
-
-
-
(521)
(521)








Balance at 28 December 2014
56,433
24,495
(11,971)
175,567
244,524

Consolidated balance sheet








At 28 June 2015
At 29 June 2014
At 28 December 2014

(unaudited)
(unaudited)
(audited)

'000
'000
'000




Non-current assets



Intangible assets
26,433
26,433
26,433
Property, plant and equipment
370,211
347,935
368,576

396,644
374,368
395,009




Current assets



Stock
4,846
4,684
5,530
Trade and other receivables
9,181
7,408
8,991
Prepayments
13,719
12,530
14,009
Cash and cash equivalents
5,426
4,047
880

33,172
28,669
29,410




Total assets
429,816
403,037
424,419








Current liabilities



Corporation tax liabilities
(7,725)
(7,344)
(8,055)
Trade and other payables
(105,093)
(96,567)
(112,254)
Other payables - finance lease obligations
(343)
(329)
(332)
Provisions
(1,330)
(1,025)
(993)

(114,491)
(105,265)
(121,634)




Net current liabilities
(81,319)
(76,596)
(92,224)




Non-current liabilities



Long-term borrowings
(23,382)
(33,321)
(39,458)
Other payables - finance lease obligations
(2,943)
(2,908)
(2,930)
Deferred tax liabilities
(12,954)
(13,155)
(12,947)
Provisions
(3,084)
(3,412)
(2,926)

(42,363)
(52,796)
(58,261)




Total liabilities
(156,854)
(158,061)
(179,895)




Net assets
272,962
244,976
244,524








Equity



Share capital
56,434
56,432
56,433
Share premium
24,503
24,491
24,495
Other reserves
(12,668)
(13,076)
(11,971)
Retained earnings
204,693
177,129
175,567
Total equity
272,962
244,976
244,524
Consolidated cash flow statement






26 weeks ended 28 June 2015
26 weeks ended 29 June 2014
52 weeks ended 28 December 2014


(unaudited)
(unaudited)
(audited)

Note
'000
'000
'000





Operating activities




Cash generated from operations
6
51,267
49,600
124,992
Interest received

34
64
103
Interest paid

(684)
(707)
(1,424)
Tax paid

(8,144)
(9,172)
(18,222)
Net cash flows from operating activities

42,473
39,785
105,449





Investing activities




Purchase of property, plant and equipment

(21,190)
(29,756)
(70,070)
Disposal of fixed assets

-
983
2,828
Net proceeds from repayment of loan note

-
7,000
7,000
Net cash flows used in investing activities

(21,190)
(21,773)
(60,242)





Financing activities




Net proceeds from issue of ordinary share capital

9
-
5
Employee benefit trust - purchase of shares

(1,746)
(5,272)
(5,272)
Net repayments of loan draw downs
7
(15,000)
(16,000)
(10,000)
Dividends paid to shareholders

-
-
(36,367)
Net cash flows used in financing activities

(16,737)
(21,272)
(51,634)





Net increase / (decrease) in cash and cash equivalents

4,546
(3,260)
(6,427)





Cash and cash equivalents at the beginning of the period
880
7,307
7,307





Cash and cash equivalents at the end of the period

5,426
4,047
880
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 26 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,





Alan Jackson
Stephen Critoph ACA
Non-executive Chairman
Chief Financial Officer
28 August 2015
28 August 2015
Accounting policies
Basis of preparation
The annual financial statements of The Restaurant Group plc are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union. The accounting policies and methods of computation used are consistent with those used in the Group's latest annual audited financial statements.
General information
The comparatives for the full year ended 28 December 2014 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
The Directors believe that the diversified brand offerings should allow the Group to take advantage of the improving economy in the United Kingdom. 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 28 June 2015 the Group had drawn down 25m of this facility and had net debt of 18m. 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 Non-trading items
There were no non-trading items in the 26 weeks ended 28 June 2015.
On 17 April 2014 The Restaurant Group disposed of part of its interest in The Living Ventures group following the sale of the Gusto business.
The Group received 7m of cash proceeds in respect of this disposal and the resulting profit on disposal of 6.9m, net of costs, was reported as a non-trading item in the 26 weeks ended 29 June 2014. The net proceeds of the disposal were distributed by way of a special dividend of 3.45 pence per share on 9 July 2014. Following the disposal, TRG's only remaining interest in the residual business is a 3.7m loan note which has been fully provided against as a result of a detailed review of the trading performance of the business.
3 Tax
The tax charge has been calculated by reference to the expected effective current and deferred tax rates for the full financial year to 27 December 2015 applied against the profit before tax for the period ended 28 June 2015. The full year effective tax charge on the underlying trading profit is estimated to be 22.4% (2014: 23.0%).
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 estimated tax liability for the 52 weeks ended 27 December 2015.
4 Earnings per share

26 weeks ended 28 June 2015
26 weeks ended 29 June 2014
52 weeks ended 28 December 2014

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
28,671
200.7
14.29
32,569
200.6
16.23
66,999
200.6
33.39
Effect of dilutive options
-
0.5
(0.04)
-
0.4
(0.02)
-
0.3
(0.04)
Diluted earnings per share
28,671
201.2
14.25
32,569
201.0
16.21
66,999
200.9
33.35










Basic earnings per share
28,671
200.7
14.29
32,569
200.6
16.23
66,999
200.6
33.39
Effect of non-trading items
-
-
-
(6,892)
-
(3.43)
(6,892)
-
(3.43)
Earnings per share - trading business
28,671
200.7
14.29
25,677
200.6
12.80
60,107
200.6
29.96
5 Dividends
Following approval at the Annual General Meeting on 14 May 2015, the final dividend in respect of 2014 of 9.30p per share, totalling 18.6m, was paid to shareholders on 8 July 2015. 
The Directors have declared an interim dividend of 6.8p per share which will be paid on 8 October 2015 to ordinary shareholders on the register at close of business on 11 September 2015. 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

26 weeks ended 28 June 2015
26 weeks ended 29 June 2014
52 weeks ended 28 December 2014

(unaudited)
(unaudited)
(audited)

'000
'000
'000




Profit before tax
36,947
40,570
84,927
Net finance charges
1,139
1,152
2,385
Disposal of investment in associate
-
(6,862)
(6,862)
Share-based payments
1,310
1,522
2,795
Depreciation
19,331
18,350
36,522
Decrease / (increase) in stocks
684
401
(445)
Decrease / (increase) in debtors
100
2,457
(605)
(Decrease) / increase in creditors
(8,244)
(7,990)
6,275




Cash generated from operations
51,267
49,600
124,992
7 Bank loans
The Group has a committed bank facility of 140m in place until June 2020. During the 26 weeks ended 28 June 2015, the Group reduced its draw down under this facility by 15.0m (26 weeks ended 29 June 2014: reduction of 16.0m, 52 weeks ended 28 December 2014: reduction of 10.0m).
8 Share capital
Share capital at 28 June 2015 amounted to 56.4m. The number of shares authorised, issued and fully paid increased from 200,648,821 to 200,655,821 in the period following the exercise of share options by employees, amounting to 7,000 shares. 
9 Related party transactions
BH Restaurants Limited (formerly Living Ventures Restaurants Group Limited) was a related party to The Restaurant Group plc through the Group's 37.4% holding until 17 April 2014 when the Group disposed of its interest in the company. The Group received 7m of cash proceeds in respect of this disposal and the resulting profit on disposal of 6.9m, net of costs, was reported as a non-trading item in the 52 weeks ended 28 December 2014. In the 52 weeks ended 28 December 2014, the Group received 0.1m of loan note interest all of which was recognised in the income statement.
10 Contingent liabilities
There were no significant changes in the nature and size of contingent liabilities at 28 June 2015 to those reported in the Annual Report and Accounts for the 52 weeks ended 28 December 2014.
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 26 weeks ended 28 June 2015 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 26 weeks ended 28 June 2015 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
28 August 2015

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