REG - Restaurant Group PLC - Interim Results
08/09/2022 07:00
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RNS Number : 6900Y Restaurant Group PLC 08 September 2022
The Restaurant Group plc ("TRG" or "The Group") Interim results for the 26
weeks ended 3 July 2022 ("H1")
Group portfolio outperforming in a challenging market
Financial summary
· Total sales of £423.4m (2021: £216.8m)
· Adjusted EBITDA of £41.7m on a pre IFRS 16 basis (2021: £11.2m)
· Adjusted Profit before tax of £10.2m on a pre IFRS 16 basis (2021:
loss of £19.9m)
· Robust cash generation in H1; net debt reduced to £158.4m on a pre
IFRS 16 basis (FY 2021 year-end: £171.6m)
· Statutory loss before tax of £28.5m on an IFRS 16 basis (2021: loss
of £57.6m), includes exceptional charges of £42.4m predominately relating to
non-cash impairment charges
· IFRS 16 net debt of £560.8m (FY 2021 year-end: £582.0m)
Highlights
- Wagamama, Pubs and Concessions deliver continued like-for-like ("LFL")
sales outperformance versus the market:
YTD LFL sales (%) vs 2019 comparable for the 33 weeks to 21 August 2022
TRG Division TRG LFL sales Market* LFL sales Performance vs market*
Wagamama +11% +5% +6%
Pubs +9% (2)% +11%
Leisure +2% +5% (3)%
Concessions** (17)% (26)% +9%
· Further improvements in customer offer; customer ratings remain very
positive
· Ongoing significant cost pressures; partially mitigated by decisive
management actions:
o 100% of utilities now hedged*** for FY22, FY23 & FY24 to provide
future certainty on the cost base
o Interest rate cap on £125m of gross debt; effective from November 2022
through to November 2025
· Disciplined approach to targeted expansion opportunities, organic and
inorganic, to drive longer-term value creation:
o Strong pipeline of new UK Wagamama restaurants with improved commercial
lease terms
o Barburrito acquisition 1 (#_ftn1) : Continuing to trade ahead of the
market (outperformance of 13% for the 33 weeks to 21 August 2022)
Andy Hornby, Chief Executive Officer, commented:
"We have made good progress in the past six months, delivering a robust
financial performance in a challenging market, with continued LFL sales
outperformance. I'd like to thank each and every member of our teams for
their phenomenal efforts in delivering these results.
We have taken decisive management actions to reduce the impact of the industry
cost pressures including fully hedging our utilities until December 2024 and
reducing our interest rate exposure through interest rate caps.
Whilst the uncertain consumer environment presents challenges for the
hospitality sector, the Group is well positioned to further develop our brands
to deliver long-term growth for all stakeholders underpinned by our strong
balance sheet."
*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
*** Utilities relate to electricity and gas. This relates to own billed and
managed sites and excludes landlord billed sites at shopping centres and
airport concession sites
Enquiries:
The Restaurant Group plc 020 3117 5001
Andy Hornby, Chief Executive Officer
Kirk Davis, Chief Financial Officer
Umer Usman, Investor Relations
MHP Communications 020 3128 8789/8742
Oliver Hughes
Simon Hockridge
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 MHP Communications for details on 020
3128 8826 or email TRG@mhpc.com.
The presentation slides will be available to download from 7:30am (UK time)
from the Company's website
https://www.trgplc.com/investors/reports-presentations
Notes:
1. The Restaurant Group plc had 423 restaurants and pub restaurants
throughout the UK as at 7 September 2022. 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 five Wagamama
restaurants in the US and 60 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" 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, pre-IFRS 16 basis measures and free
cash flow are defined within the glossary at the end of this report.
Business review
Introduction
Our performance in the year so far gives us further confidence in the strength
of our business model and our ability to navigate the near-term sector
challenges.
We update on four key areas below:
1) Trading update by business division for the year-to-date (33 weeks to
21 August 2022)
2) Current trading (covering the period post the Group's AGM trading
update on 24 May 2022)
3) Navigating near-term sector cost challenges
4) Our disciplined approach to targeted long-term growth
1. Trading update (LFL sales % vs 2019 comparable for the year to date
("YTD") covering 33 weeks to 21 August 2022)
Wagamama
Wagamama achieved LFL sales growth of 11% in the YTD, representing a 6%
outperformance versus the market. Customer ratings have remained strong with
the June 2022 external NPS scores (as measured by BrandVue) positioning
Wagamama as the number one brand amongst casual dining chains in the UK.
The key drivers of our consistent market out-performance are as follows:
- Continuous menu innovation: We began 2022 with a new vegan menu
launch which was well received and saw our overall total plant-based (vegan
and vegetarian) participation rise to its highest level. The business
continues to innovate in anticipation of future food trends with a focus on
maintaining our 50% plant-based commitment whilst also protecting other iconic
Wagamama dishes
- Unique colleague culture: the Wagamama business continues to be
underpinned by our unique culture and ethos. In 2022 we have taken this
further and supported our teams through the introduction of mental health and
well-being initiatives along with mental health training for team members
- Purpose-led marketing activity: Throughout 2022 we have continued
to work with Young Minds to drive awareness of mental health in young people
and we continue to invest in supporting students through our student platform,
the Noodle Union
- Well-invested estate: Wagamama's estates review process has
ensured we have continued to regularly invest in our sites through selective
transformational and refresh refurbishments
Pubs
We have seen continued strong trading with LFL sales growth of 9%,
representing a 11% outperformance versus the market. Customer sentiment
remains strong with social media scores (consolidation of Google, Facebook and
Tripadvisor scores) averaging 4.5/5 for the last 12 months to June 2022,
maintaining our highest rating over the past five years.
The key drivers of this strong out-performance:
- Targeting good customer demographics with limited competition
nearby: We remain disciplined in our proven approach to new pub site
selection and do not compromise on our requirements on population and
demographics within defined drive times of our pub locations. We regularly
take on large scale renovation projects, over many months and years, to ensure
we have a unique property in the right location
- Expansive buildings and grounds providing multiple ancillary
trading opportunities: Examples include the "The Red Fox" on The Wirral
which has function space as well as outdoor covered garden areas and "The
Architect" in Chester with a fully-fitted outside bar and stretch tent
- Continuous evolution of food and drink menu with local
flexibility: The business can be nimble with menu changes both regionally and
locally and a full appraisal of the core menu content and architecture has led
to improvements in the quality of many dishes
The business also benefits from strong asset backing with approximately 50% of
our pubs being freehold. In August 2022, our freehold pub estate was valued
at £160 million according to a third-party valuation commissioned by the
Group.
Leisure
The business has achieved LFL sales growth of +2%, just behind the market.
Our partnership with Yumpingo has provided greater customer insight on both
customer service standards and dish feedback, and we have seen an improving
trend on NPS scores over the last six months (as measured on the Yumpingo
platform) for both Frankie & Benny's and Chiquito.
The key drivers of performance have been:
- Ongoing investment in food quality, menu simplification and our
virtual brands: Further quality changes to the Frankie's main menu focussed on
pasta dishes combined with significant improvements to our drinks menu across
all brands. Core menu items will reduce by a further 15% to 20% in our
winter menu launch to support improved dish execution and mitigate some of the
inflationary pressures we are experiencing
- Improved colleague engagement through our 'Raise the Roof"
programme: Over 20% of our Leisure teams have now graduated through the
programme driving a strong improvement in customer NPS and team engagement
scores
- Selective refurbishments: Over 20% of the Frankie and Benny's
estate has had a capital light refurbishment over the past 12 months which
has been very well received by customers and our teams, and we will
selectively explore further opportunities to invest in the estate
Concessions
We currently have our entire estate of 43 sites open. LFL sales declined by
17%, 9% ahead of the passenger volume decline in the period. Sales have
benefitted from a better than anticipated recovery in passenger volumes as
well as higher average spend per passenger.
Recruitment and retention have been well-publicised issues since the Spring
but our teams have performed heroically against a tough backdrop to reopen our
sites and be ready for the busy summer trading period.
Whilst we are pleased with progress, the Concessions sales recovery profile
has been tempered by reduced peak summer flight schedules announced by various
airlines following operational challenges at major UK airports.
The Concessions team are well positioned to maintain this momentum if
passenger volumes continue to improve through 2023 and 2024.
2. Current Trading update (LFL sales % vs 2019 comparable for the period
post the Group's last trading update in May)
YTD LFL sales (%) vs 2019 comparable post AGM trading statement update in May
AGM trading statement AGM trading statement "Excl. VAT benefit" (illustrative) Trading since AGM trading statement
19 weeks to 15(th) May 2022 19 weeks to 15(th) May 2022 14 weeks to 21st August 2022
Wagamama +15% +11% +5%
Pubs +10% +6% +8%
Leisure +6% +2% (4%)
Concessions (20%) (22%) (14%)
- Further good momentum across the portfolio, despite recent trading
being impacted by three factors:
o In-line with the wider market, both Wagamama and Leisure's
delivery-related sales have moderated in recent months
o Wagamama and Leisure sales adversely impacted by heatwaves in July and
August; with our Pubs business benefitting from the heatwaves
o Concessions sales recovery profile impacted by airlines reducing planned
summer flight schedules
3. Navigating near-term sector challenges
There are a number of well-documented sector challenges that the Group is
navigating, and management have developed a series of actions to help mitigate
the impact.
- Firstly, the UK consumer will become under greater pressure given the
cost-of-living squeeze. The Group will remain focused on delivering value for
money to customers across all its brands while continuing to develop our menus
through ongoing product innovation
- Secondly, we expect a continuation of the inflationary pressure on
each of our labour, food and drink purchases and utility cost lines.
Mitigating actions taken by the Group include:
o Continuing to develop our employee proposition in order to aid retention
and attract new colleagues to our businesses
o Working across our long-term supply base to mitigate the inflationary
pressures that are impacting food and drink supply;
o Fully hedging 2 (#_ftn2) our utilities volume for FY22, FY23 and FY24 to
provide certainty on cost whilst we continue to work on reducing our utilities
consumption as part of our ESG agenda
Our FY22 inflation expectations for labour and food and drink purchases are in
line with the group's previous guidance, with early indications being that
FY23 inflationary pressures are expected to be broadly-in-line with FY22, as
laid out in the table below:
Themes Inflationary impact (FY22 vs FY21) Inflationary impact (FY23 vs FY22)
Labour market pressures 6%+ Inflation expected to be at broadly similar levels to FY22 inflation (6%+)
General food and drink inflation 9 to 10% Inflation expected to be at broadly similar levels to FY22 inflation (10%+)
Note: All inflation figures are stated as their incremental impact in each
year post mitigating activities
On our utilities cost exposure, the Group took the following decisive action
to hedge volumes for both gas and electricity for FY23 and FY24:
· Hedged c. 50% of volume in November 2021
· Hedged a further c. 25% of volume in March 2022 (cumulatively c.75%
hedged)
· Hedged a further c. 10% of volume in July 2022 (cumulatively c.85%
hedged)
· Finally hedged the remaining 15% of volume in August 2022
As a consequence, TRG is 100% hedged for FY22, FY23 and FY24. In addition,
we are 80% hedged for the first three quarters of FY25.
The table below shows the inflationary impact on our utilities balance post
this hedging activity:
Inflationary impact post hedging (FY22 vs FY21) Inflationary impact post hedging (FY23 vs FY22) Inflationary impact post hedging (FY24 vs FY23)
Costs expected to be c.£9m higher in 2022 vs 2021 Costs expected to be c. £12m higher in 2023 vs 2022 Costs expected to be c. £7m lower in 2024 vs 2023
If the Group had not adopted this proactive hedging strategy, and needed to
hedge its entire utilities volume at current spot prices (i.e. early
September) TRG would have been faced with incremental inflation as follows:
· 2023 inflationary cost would have been £25m to £40m higher than our
fixed contract
· 2024 inflationary cost would have been £15m to £30m higher than our
fixed contract
- Thirdly, interest rates have increased significantly and are expected
to increase further in the Autumn of 2022 and into 2023. Given the good cash
flow generation of the business and significant liquidity the Group has:
· Repaid £89m of term loan facility. Based on current interest rates
the repayment will save at least £7m in interest cost on an annualised basis
and improves balance sheet efficiency
· Purchased interest rate caps limiting the SONIA bank rate to 0.75% on
£125m of gross debt through to November 2025, reducing exposure to future
interest rate increase
4. Disciplined approach to targeted long-term growth
Given the near-term market dynamics outlined above we are adapting our
targeted capital investment plans in 2023. Our Wagamama and Pubs businesses
have a track record of delivering strong returns on new sites and despite the
near-term cost challenges we plan to selectively grow both businesses. Key
developments include:
o Securing improved commercial terms for new UK Wagamama restaurant leases
o Ceasing the roll-out of our Wagamama delivery kitchens in light of the
Delivery market softening and an increase in capital investment required
o Reduced Pub openings for FY23 in light of current valuations for high
quality UK pub assets
o Maintaining Barburrito roll-out plans given lower per unit capital
requirement and limited market penetration
Based on the above our refocused expansion pipeline over the course of FY22
and FY23 is as follows:
2022 planned openings 2023
planned openings Average capex investment
Wagamama UK restaurants 8 6-8 £1.2m-£1.5m
Wagamama UK Delivery kitchens 3 0 £0.4m-£0.5m
Pubs(1) 2 2 £1.8m-£4.5m
Barburrito n/a 3-4 £0.4m-£0.5m
(1)Range relates to both leasehold and freehold pubs (i.e. £4.5m capex
investment relates to a freehold pub)
Whilst there are near-term sector challenges to navigate, we remain focused on
longer term trends and opportunities for sustainable growth.
The table below illustrates the opportunity to grow our business and deliver
good shareholder returns over the next five years across:
Expected estate as at Dec 2022 Dec 2027 estate potential Average new site EBITDA(1)
Target ROIC(2)
Wagamama UK restaurants c.190 £400k-£600k
154 >40%
Pubs 80 c.90 £350k-£600k >20%
Barburrito 16 c.30 £120k-£180k >30%
Wagamama US JV (20% share) c.30 £80k-£120k(3)
9 >25%
(1)Based on a combination of actual returns from 2019 & 2020 openings
where applicable and feasibility returns for future pipeline sites
(2)ROIC refers to return on invested capital defined by pre-IFRS 16 outlet
EBITDA/initial capex invested
(3)Represents TRG's 20% share of each sites EBITDA
Wagamama International franchise: We have made very good progress in our
expansion plans this year and now expect to open eight to 10 new sites in FY22
predominately in Italy and the Middle East. We expect to end the year with
c. 65 sites operating across our Wagamama international franchise business.
Going forward we expect to open five to eight new restaurants per year,
representing a capital efficient way to expand the Wagamama brand
internationally.
Outlook
Since the Group's AGM update in May 2022:
· Utilities inflation is £2m higher than previous guidance due to
unhedged volumes on landlord billed sites and new openings
· Wagamama and Leisure sales were adversely impacted by heatwaves in
July and August (whilst our Pubs sales benefitted from the heatwaves)
For the avoidance of doubt, today's update does not include the impact of any
potential Government intervention.
Summary
Despite the well-documented pressures facing the sector, TRG is confident in
our ability to continue to outperform the sector and deliver long-term
sustainable growth for our stakeholders:
· We have a strong portfolio of brands consistently out-performing
the market
· We have taken decisive action to hedge our utility costs and
reduce our interest rate exposure
· We benefit from a strong balance sheet with substantial liquidity
Driving forward our ESG agenda
Environmental initiatives
Through our 'Preserving the Future' steering Group we are mobilising the
organisation behind our ambitious target of net zero by 2035.
Having moved all 3 (#_ftn3) of our directly controlled supplies of
electricity, gas and LPG to renewable sources in Q4 last year, we have
invested in carbon removal reforestation projects to offset our scope 1 and 2
residual emissions from FY 2022.
We continue to focus on operational energy efficiency and are making good
progress through a combination of behavioural change, sharing best practice
across our estate, and piloting new technologies to drive further
efficiencies.
In the period we increased our focus on our scope 3 emissions, which account
for the bulk of our carbon footprint. With the support of a specialist
sustainability consultancy "Engie Impact", we have identified a scope 3
roadmap and decarbonisation levers specific to our business. We are now
building out a detailed plan to implement the actions identified in the short,
medium and long term. This will involve close co-operation and engagement
with our suppliers and distribution partners. We will offset remaining
emissions from 2035 onwards, to meet our net zero target.
With regard to packaging, we have developed a new packaging solution for
Wagamama, which will eliminate up to 330 tonnes of virgin plastic per year and
reduces the carbon intensity of the packaging for our most popular dish, Katsu
curry, by 62%. We are rolling this out across the Wagamama business,
alongside our Bowl Bank bowl return scheme. At present, c.50% of our total
Wagamama restaurant estate have the new packaging.
On our Reduce Waste priority, we continue to work with the Sustainable
Restaurant Association on their Plate Waste Project. Audits following
implementation of initial recommendations on test sites across our divisions
have shown an average reduction in plate waste per cover of c.20%. In the
second half of this year and into 2023 we will work to implement these and
other SRA recommendations to reduce waste across our business.
Social initiatives
On the social side, our role to support our colleagues and communities, and to
create a representative, diverse and inclusive environment has never been more
critical.
In a very challenging recruiting environment for the sector, we are on track
to increase the number of apprentices on our programmes or graduating this
year to around 450 - an increase of c.200 vs 2021.
We have launched a range of wellbeing and engagement initiatives for
colleagues across our divisions in the period, including a new rewards and
recognition platform in our Leisure and Concessions division, mental health
training and mental health first aid boxes in Wagamama to ensure our
restaurant teams have access to guidance and resources to look after their
mental health & wellbeing, and a new wellbeing initiative in our pubs
division, which has initially seen 90 Wellbeing Ambassadors across our pubs
receiving mental health awareness training through our partnership with The
Burnt Chef Project, a not-for-profit organisation who focus on improving the
wellbeing of those within the hospitality profession and challenging the
stigma of mental health.
Aligned with our focus on mental health and wellbeing, our key charity
partners are 'Mind' and 'Young Minds' (Mental Health Charities), and we also
support a large number of charities through our pubs and restaurants locally
with a variety of fundraising activities. Through a combination of colleague
led fundraising, company matched programmes, and charity partnerships we have
raised over £200,000 for charity in the first half of the year.
We also placed a particular emphasis on diversity and inclusion, with a range
of interactive training programmes and learning resources developed and
launched across our divisions, and initiatives and celebrations aligned with
campaigns going on in the wider world to encourage inclusion.
Financial Review
The 26 weeks to 3(rd) July 2022 is the first Interim period since 2019 which
has not been significantly impacted by restrictions related to COVID and we
are pleased to be reporting an Adjusted profit before tax and exceptional
items (on an IFRS 16 basis) of £13.9m (2021: loss of £39.5m). The first 27
weeks of 2021 were significantly impacted by Covid restrictions with the Group
only being able to trade fully for seven weeks and as such all financial
measures for the first half of 2022 are significantly stronger.
Statutory Results
The key statutory financial measures (IFRS 16) are summarised below and are
stated after the impact of exceptional costs:
STATUTORY RESULTS
(IFRS 16)
26 weeks ended 3 July 2022 27 weeks ended 4 July 2021
£m
£m
Revenue 423.4 216.8
Operating(loss)* (12.2) (34.9)
Loss before tax* (28.5) (57.6)
Loss after tax* (26.1) (55.0)
Statutory loss per share (pence)* (3.4)p (7.8)p
(*)Restated
Revenue for the period was £423.4m (2021: £216.8m) which represents an
increase of 95% on the prior year, with strong trading across our Wagamama,
Pubs and Leisure businesses. The Concessions business was impacted in Q1
with limited International travel but has seen a better than expected recovery
through Q2 2022.
As outlined in the business review, in the current year we were particularly
pleased to have delivered a continued strong LFL sales outperformance versus
the market across our Wagamama, Pubs and Concessions businesses, illustrating
the strength of our customer propositions and ability to outperform in all
market conditions. Our Leisure business achieved LFL sales growth behind the
market, with the business impacted to some degree by the increased
inflationary pressures on the UK consumer.
The operating loss of £12.2m (2021: £34.9m) is due to the impact of
significant exceptional items of £47.7m (2021: £16.2m) which are explained
further below. These exceptional items are primarily due to a non-cash
impairment charge, as a consequence of the expected inflationary pressures and
challenging macro-economic environment in the near-term, which has meant a
reduction in our future trading expectations for certain sites.
Net interest costs of £16.3m (2021: £22.7m) are significantly lower than the
prior year due to the recognition of an exceptional gain in the period of
£5.3m on our interest rate caps. The interest rate caps limit SONIA rates
to 0.75% until November 2025 on £125m of gross debt, and until November 2026
on £100m of gross debt. The interest cost prior to this exceptional gain is
£21.6m compared to £20.8m in the prior year, the increase in underlying cost
of debt is due to the refinancing completed in May 2021.
Alternative Performance Measures
TRG uses a number of non-statutory measures to monitor business performance
which are referred to within the Interim Report, but primarily relate to
Adjusted and pre-IFRS 16 profit metrics. 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 TRG's
view that presenting the information on a pre-IFRS 16 basis will provide a
useful basis for understanding the Group's results to all stakeholders.
Specifically, the measures mainly relate to three adjustments:
- The main profit measure used is Adjusted EBITDA. This is not a
statutory measure but closely represents the Group's ability to make cash
trading profits as it excludes key non-cash elements of the Income Statement
such as depreciation and amortisation
- The adjusted profit and debt measures are based on the IAS 17
approach to lease accounting and does not include the impact of IFRS 16. This
is used as it more closely represents the cash profit of the business, and
debt as measured by our banks
- The adjusted profit measures are quoted excluding the impact of
items that management have deemed as exceptional as they are material and not
related to underlying trading
As these measures are not defined by accounting standards, they may not be
comparable across companies. The adjusted results may exclude significant
costs (such as restructuring or impairments) and so may not be a complete
picture of the Group's financial performance, which is presented in the
statutory results.
The key alternative performance measures (APM) are summarised below. Both
pre IFRS 16 and IFRS 16 figures are shown and are stated before the impact of
exceptional costs:
APM (Pre-IFRS 16) APM (IFRS
16)
26 weeks ended 3 July 2022 27 weeks ended 4 July 2021 26 weeks ended 3 July 2022 27 weeks ended 4 July 2021
Pre-IFRS 16
Pre-IFRS 16
IFRS 16
IFRS 16
£m
£m
£m
£m
Revenue 423.4 216.8 423.4 216.8
Adjusted(1) EBITDA 41.7 11.2 72.2 23.6
Adjusted(1) operating profit/(loss) 22.9 (8.6) 35.5 (18.7)
Adjusted(1) operating margin 5.4% (4.0%) 8.4% (8.6%)
Adjusted(1) profit/(loss) before tax 10.2 (19.9) 13.9 (39.5)
(1)The Group's adjusted performance metrics are defined within the glossary at
the end of this report. All such adjusted measures are stated pre-exceptional
items
Adjusted EBITDA (on a pre-IFRS 16 basis) for the 26 weeks is £41.7m (2021:
£11.2m). As mentioned above and outlined in the business review, the main
driver of this increase is due to the unrestricted trading in our restaurants
and the LFL sales outperformance of our Wagamama, Pubs and Concessions
business against their respective markets, and the management actions taken to
partially mitigate the impact of the inflationary pressures.
The Group made an adjusted profit before tax (on a pre-IFRS 16 basis) for the
period of £10.2m (2021: loss £19.9m).
Cash flow and net debt
The Group ended the first half with net debt on an IFRS 16 basis of £560.8m
(2021: £635.0m). The key driver of this reduction has been as a result of
the cash generated by the business with pre IFRS 16 net debt being reduced by
£41.8m to £158.4m.
Operating cash flow in the period improved significantly to £57.6m from
£14.3m due to improved Adjusted EBITDA of £41.7m (2021: £11.2m), and a
recovery in the Group's working capital position following unrestricted
trading, which provided an inflow of £15.9m (2021: £3.2m).
We restarted our targeted capital expenditure programme with an increased
spend of £22.0m (2021: £12.0m) as we grew both our Wagamama and Pubs
businesses off the back of our strong balance sheet and selective
opportunities within the property market. We expect to open eight Wagamama
restaurants and two new pubs before the end of the financial year.
Summary cash flow for the year (on a pre-IFRS 16 basis) is set out below:
HY 2022 HY 2021
£m
£m
Adjusted EBITDA (Pre-IFRS 16 basis) (1) 41.7 11.2
Working capital and non-cash adjustments 15.9 3.2
Operating cash flow(2) 57.6 14.3
Net interest paid (11.0) (14.3)
Tax paid (2.0) (0.2)
Refurbishment and maintenance expenditure (15.6) (6.7)
Free cash flow 29.0 (6.8)
Development expenditure (6.4) (5.3)
Movement in capital creditor 1.0 -
Utilisation of onerous property cost provisions (3.9) (3.6)
Exceptional costs (3.1) (7.8)
Proceeds from issue of share capital - 166.8
Other items (1.4) -
Cash movement 15.2 143.2
Net Debt (Pre IFRS 16 basis)
Group net debt brought forward (171.6) (340.4)
Non-cash movements in net debt (2.0) (3.1)
Group net debt carried forward (Pre IFRS 16 basis) (158.4) (200.2)
Incremental lease liabilities (IFRS 16) (402.4) (434.8)
Group net debt carried forward (IFRS 16 basis) (560.8) (635.0)
(1)The Group's adjusted performance metrics are defined within the glossary at
the end of this report. All such adjusted measures are stated
pre-exceptional items
(2)Operating cash flow excludes certain exceptional costs and includes
payments made against lease obligations
Given the Group's significant cash headroom and confidence in the underlying
cash generation across our businesses, TRG has repaid £89.1m of its term loan
during the period reducing the current facility from £330.0m to £240.9m and
so reducing future interest costs. Cash headroom was £184.2m as at the
half-year period end (2021: £227.4m).
The Group continues to target net debt/EBITDA 4 (#_ftn4) below 1.5x in the
medium term.
This strong financial position and substantial liquidity enables the Group to
navigate the near-term sector challenges with a good degree of cash flow
flexibility in its operating model as laid out in the table below:
FY22 expected out-turn FY23 guidance
Disciplined and flexible capex programme £55m to £60m £45m to £50m
Cash interest costs £21m to £22m £18m to £19m
Reduced onerous lease exposure £9m to £10m £6m to £7m
Exceptional items
An exceptional pre-tax charge of £42.4m has been recorded in the period
(2021: £18.1m). The key driver of this charge has been the impairment of
certain assets due to the near-term inflationary pressures and economic
outlook reducing management's expectations for 2023 and 2024. An impairment
charge of £45.4m has been provided in the period (2021: £1.3m).
The other significant exceptional item is a gain of £5.3m on the interest
rate caps which have appreciated in value since the year end due to the
increase in interest rates actioned by the Bank of England, and expectation of
further interest rate rises.
Additionally, £2.3m has been spent on projects to transform our head office
efficiency and to carry on the process of restructuring our estate.
The tax credit relating to these exceptional charges was £6.0m (2021: £3.5m
charge).
Cash expenditure associated with the above exceptional charges was only £3.1m
(2021: £7.8m).
Tax
The tax credit for the period was £2.4m (2021: credit of £2.6m), summarised
as follows:
HY 2022 HY 2021
Trading Exceptional Total Trading Exceptional* Total*
£m
£m
£m
£m
£m
£m
Corporation tax 3.3 - 3.3 - (3.3) (8.3)
Deferred tax 0.3 (6.0) (5.7) 2.5 7.0 9.5
Total current year tax 3.6 (6.0) (2.4) (2.5) 3.7 1.2
Adjustments in respect of prior years - - - (3.6) (0.2) (3.8)
Total tax (credit) / charge 3.6 (6.0) 2.4 (6.1) 3.5 (2.6)
Effective tax rate (excl prior years adjustments) 25.9% 14.2% 8.4% 6.3% 20.4% 2.1%
Effective tax rate 25.9% 14.2% 8.4% 15.4% 19.3% 4.5%
*Restated for impact of rates provision adjustment, see Note 2
The Group's pre-exceptional effective tax rate is 25.9% excluding prior period
adjustments (2021: pre-exceptional effective tax rate of 14.2% excluding prior
period adjustments). The effective tax rate exceeds the statutory corporation
tax rate of 19.0% primarily as a result of non-qualifying depreciation and a
one-off tax charge relating to share-based payments due to a reduction in the
share price in the year (which accounts for 3.8% of the differential on the
effective tax rate).
The current year exceptional tax credit of £6.0m comprises a corporation tax
credit of £3.3m relating to the utilisation of tax losses against the current
period corporation charge, as well as a further £2.7m deferred tax credit
relating to timing differences arising on the impairment of fixed assets,
right-of-use assets and intangibles.
Selected FY22 modelling guidance
· Total capital expenditure approximately £55m-£60m:
o Maintenance and IT investment of £20m-£25m
o Refurbishment capex of c.£10m
o Expansionary capex of c.£25m
· IFRS 16 EBITDA add-backs (i.e., rent & other property non-cash
charges):
o Net add-back £54m to £58m
- £57m to £60m for fixed rent
- (£2m) to (£3m) for non-cash property charges
· Depreciation and interest detailed in table below:
Pre-IFRS 16 £'m IFRS 16 £'m Total £'m
P&L Depreciation 41-42 35-37 76-79
P&L Interest 24-25 17-18 41-43
Going concern
The directors have adopted the going concern basis in preparing these interim
accounts after assessing the Group's principal risks including current
macroeconomic headwinds, relating to the cost-of-living crisis, elevated
levels of inflation and utility market volatility.
The Group has substantial liquidity with £184.2m in cash and cash
equivalents, or available facilities at the balance sheet date, and these
facilities are committed until at least March 2025. Further details of the
Group's debt facilities are in Note 15 to the Interim Accounts.
Whilst H1 trading is robust, the Directors are cautious about the ability for
our customers to continue their current level of spending in our restaurants
and pubs whilst the cost-of-living crisis continues and specifically the
unprecedented increases in UK household energy bills. In preparing the 'base
case' forecast for the period of going concern to 30 September 2023, the
Directors have assumed a lower level of sales growth for the next 12 months
versus 2019, which is also lower than the growth rates achieved in H1 as
reported in our half year results. The 'base case' forecast is also updated
for increased expectations of labour and input costs inflation as well as the
known increase in utilities costs given the vast majority of the Group's
volume is now fixed for 2023 and 2024. In this forecast, available liquidity
does not drop below £115m compared to a minimum liquidity covenant of £40m,
and Senior Secured Net Leverage does not exceed 2.0x against a covenant of no
more than 4.5x.
In addition, the Board has considered a 'stress case' scenario where sales
levels have been further reduced by 5% across all divisions, and an additional
2% of food and drink inflation has been included above the base case. In
this 'stress case' scenario, liquidity falls to a minimum of £94m, and Senior
Secured Net Leverage increases to 2.9x but still comfortably within the
covenants of the Group's banking facilities.
The Board have also considered a reverse stress case to determine the level by
which sales would need to fall from the 'base case' on a sustained basis over
the next 12 months before there is any risk of covenant breach in September
2023. Compared to the 'base case' sales would have to fall by 12% with
mitigating actions taken on both operating and capital expenditure, which are
within the control of the directors, before there is a risk of a covenant
breach. The Board considers that this level of revenue decline in the reverse
stress case is extremely unlikely, given the strength of business' performance
historically and on how our consumers have reacted in previous recessionary
environments. During the next 12 months if the Group were to experience a
sustained reduction in sales the Group would take broader mitigating actions
to manage any potential risk of a covenant breach. If it should be required,
the directors would proactively engage with its lending group and are
confident that covenant waivers would be provided as they were in similarly
extreme circumstances during the pandemic. Finally, we have not assumed any
Government intervention in our scenarios although the Board of Directors has a
reasonable expectation that the new Government will provide significant
support for both UK Households and UK Business' in navigating the near-term
challenges presented by both the energy and cost-of-living crisis.
The Board has a reasonable expectation that the Group has adequate resources
to continue in operational existence for the period to 30 September 2023,
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 of preparation.
Principal Risks and Uncertainties
The Group set out its internal risk management process together with its
formal assessment of its principal risks and uncertainties as at the date of
publication on pages 57 to 58 of its 2021 Annual Report. Since then, the
Group's Risk and Audit Committees have continued to review and update the main
risks likely to impact the Group while assessing the controls and mitigations
being put in place across the Group and maintaining a watch on emerging risks,
such as the cost-of-living crisis and the significant increase in inflationary
pressures, to ensure that the appropriate steps are taken at the right time.
The Senior Management Risk Committee has met three times to date during the
financial year and reported back to the Audit Committee and, ultimately, to
the Board. The key material risks and mitigations as currently identified by
the Directors are listed below:
Risk Mitigating Factors
Reduced Consumer Demand • Broad portfolio of brands that offer a range of cuisines across various
customer demographic
• Risk of reduced consumer demand due to the cost-of-living crisis,
significant inflation levels and increases to the UK household energy price • Ongoing focus on ensuring value for money offering across the brands and
cap day parts with regular price benchmarking against competitor pricing
• Flexible capital allocation policy to ensure that plans are adapted to a
changing economic environment
• Periodic business review process and weekly trading meeting to review
and assess and adaption to trading plans required.
Inflation • Utilities hedging in place for 100% of 2022, 2023 and 2024 volume and c.
80% of volume for Q1 to Q3 2025.
• Risk of significant cost increases across food, drink and utilities
• Strategic purchasing and category management approach so that buyers can
partially mitigate increases through negotiation, tender or by alternative
supplier selection
• Streamlined supply base post restructuring in order to drive economies
of scale and better purchasing power with suppliers.
• Rolling programme of securing either longer- or shorter-term contracts
to mitigate pricing fluctuations.
Talent attraction and retention • Implementation of a new recruitment process to enhance the quality of
team selection.
• Failure to attract, retain, or develop Chefs, GMs, and senior managers.
• Continued improvement of onboarding and induction process focused on the
first 90 days of employment to improve employee engagement.
• Extension of our apprenticeship schemes across the brands to further
enhance team development with a particular focus on back of house roles.
• Ongoing review of pay rates to ensure the brands are competitive within
the regions they trade.
Allergens • Clear Allergen policies and procedures established across all business
operations.
• Risk of guests suffering from the failure to deliver our allergens
policies and procedures, or inaccurate or insufficient information provided to • Detailed database built up by ingredient/supplier and testing of
guests concerning allergens. database including physical verification.
• Allergen training refreshed as part of the reopening training and is
completed on induction by all restaurant employees across all businesses.
• Allergy advice on menus with daily updates to source data.
Cybersecurity • Payment Card Industry Data Security Standard (PCI DSS) v3.2 annual
compliance certification process.
• Risk of cybersecurity failure or incident leading to data loss,
disruption of services, fines and trading or reputational damage. • ASV scans and penetration tests with remediation activities completed
where required.
• CyberEssentials certification completed in 2021
Supply chain management • All essential products are dual sourced.
• Risk of loss of key supplier, jeopardising supply and availability. • Regular monitoring of all logistics partners and key suppliers to
monitor performance.
• Risk that the distribution network is unable to meet the demands of our
restaurants. • Proactive contractor performance management reviews.
• Supply contracts in place with all key suppliers for a minimum of 24
months.
INDEPENDENT REVIEW REPORT TO THE RESTAURANT GROUP PLC
Conclusion
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 3 July
2022 which comprises a Condensed Consolidated Income Statement, Condensed
Consolidated Statement of Comprehensive Income, a Condensed Consolidated
Balance Sheet, a Condensed Consolidated Statement of Changes in Equity, 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.
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 3 July 2022 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. 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.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of 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.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. 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.
Ernst & Young LLP
London
7 September 2022
The Restaurant Group plc
Consolidated income statement
26 weeks ended 3 July 2022
Trading Exceptional items Total
business (Note 4)
(Unaudited) (Unaudited) (Unaudited)
Note £'m £'m £'m
Revenue 3 423.4 - 423.4
Cost of sales (359.6) (46.1) (405.7)
Gross profit/(loss) 63.8 (46.1) 17.7
Share of results of associate - - -
Administration costs (28.3) (1.6) (29.9)
Operating profit/(loss) 35.5 (47.7) (12.2)
Interest payable 6 (22.0) - (22.0)
Interest receivable 6 0.4 5.3 5.7
Profit/(Loss) on ordinary activities before tax 13.9 (42.4) (28.5)
Tax on (loss)/profit from ordinary activities 7 (3.6) 6.0 2.4
Profit/(Loss) for the period 10.3 (36.4) (26.1)
Other comprehensive loss:
Foreign exchange differences arising on consolidation (0.2) - (0.2)
Total comprehensive profit/loss for the period 10.1 (36.4) (26.3)
Earnings per share (pence) 1.3 (4.8) (3.4)
EBITDA 72.2 (1.4) 70.8
Depreciation, amortisation and impairment (36.7) (46.3) (83.0)
Operating Profit/(Loss)
35.5 (47.7) (12.2)
Consolidated income statement
27 weeks ended 4 July 2021 53 weeks ended 2 January 2022
Trading Exceptional items* Total Total*
business (Note 5)
(Unaudited) (Unaudited) (Unaudited) (Audited)
Note £'m £'m £'m £'m
Revenue 3 216.8 - 216.8 636.8
Cost of sales* (213.6) (14.6) (228.2) (571.9)
Gross (loss)/profit
3.2 (14.6) (11.4) 64.7
Share of results of associate (0.1) ‐ (0.1) (0.3)
Administration costs (21.8) (1.6) (23.4) (52.6)
Operating (loss)/profit (18.7) (16.2) (34.9) 11.8
Interest payable 6 (20.9) (1.9) (22.8) (47.6)
Interest receivable 6 0.1 ‐ 0.1 0.6
Loss on ordinary activities before tax (39.5) (18.1) (57.6) (35.2)
Tax on loss from ordinary activities* 7 6.1 (3.5) 2.6 (5.1)
Loss for the period (33.4) (21.6) (55.0) (40.3)
Other comprehensive income:
Foreign exchange differences arising on consolidation 0.1 ‐ 0.1 0.1
Total comprehensive loss for the period (33.3) (21.6) (54.9) (40.2)
Earnings per share (pence) (4.8) 3.1 (7.8) (5.6)
EBITDA 23.6 (2.5) 21.1 115.8
Depreciation, amortisation and impairment (42.2) (13.7) (55.9) (104.0)
Operating profit/(loss) (18.7) (16.2) (34.9) 11.8
*Restated refer to Note 2
Consolidated balance sheet
As at 3 July 2022 As at 4 July 2021* As at 2 January 2022*
(Unaudited) (Unaudited) (Audited)
Note £'m £'m £'m
Non-current assets
Intangible assets 9 591.6 599.0 599.9
Right of use assets 10 265.9 302.4 289.4
Property, plant and equipment 11 272.0 292.0 285.1
Derivative financial instruments 8.8 - 2.1
Other receivables 5.4 2.9 4.7
1,143.7 1,196.3 1,181.2
Current assets
Inventory 6.8 5.1 6.0
Trade and other receivables 16.4 12.8 13.9
Prepayments 10.5 4.0 6.1
Corporation tax debtor 7 1.3 12.6 -
Cash and cash equivalents 72.6 115.8 146.5
107.6 150.3 172.5
Total assets 1,251.3 1,346.6 1,353.7
Current liabilities
Trade and other payables (148.6) (110.8) (128.1)
Corporation tax liabilities 7 - - (0.2)
Provisions* (2.5) (1.1) (3.1)
Lease liabilities 10 (61.6) (75.4) (73.1)
(212.7) (187.3) (204.5)
Net current liabilities (105.1) (37.0) (32.0)
Long-term borrowings 15 (231.0) (316.0) (318.1)
Deferred tax liabilities* (41.7) (52.7) (43.6)
Lease liabilities 10 (340.8) (359.4) (337.3)
Provisions* (3.4) (1.4) (3.2)
(616.9) (729.5) (702.2)
Total liabilities (829.6) (916.8) (906.7)
Net assets 421.7 429.8 447.0
Equity
Share capital 13 215.2 215.2 215.2
Share premium 394.1 394.1 394.1
Other reserves 0.9 (2.3) 0.1
Retained earnings* (188.5) (177.2) (162.4)
Total equity 421.7 429.8 447.0
*Restated refer to Note 2
Consolidated statement of changes in equity
Share Capital Share Premium Other Reserves Retained Earnings* Total
Note £'m £'m £'m £'m £'m
Balance at 27 December 2020 165.9 276.6 (3.9) (131.3) 307.3
Total comprehensive income/(loss) for the period* - - 0.1 (45.9) (45.8)
Share issue 13 49.3 125.9 - - 175.2
Share issue transaction costs - (8.4) - - (8.4)
Share-based payments - - 1.5 - 1.5
Deferred tax on share-based payments - - - - -
Balance at 4 July 2021 (unaudited) 215.2 394.1 (2.3) (177.2) 429.8
Balance at 27 December 2020 165.9 276.6 (3.9) (131.3) 307.3
Total comprehensive income/(loss) for the period* - - 0.1 (31.1) (31.0)
Share issue 13 49.3 125.9 - - 175.2
Share issue transaction costs - (8.4) - - (8.4)
Share-based payments - - 3.4 - 3.4
Deferred tax on share-based payments - - 0.5 - 0.5
Balance at 2 January 2022 (audited) 215.2 394.1 0.1 (162.4) 447.0
Balance at 2 January 2022 (audited) 215.2 394.1 0.1 (162.4) 447.0
Total comprehensive loss for the period - - (0.2) (26.1) (26.3)
Share-based payments - - 1.5 - 1.5
Deferred tax on share-based payments - - (0.5) - (0.5)
Balance at 3 July 2022 (unaudited) 215.2 394.1 0.9 (188.5) 421.7
* Restated refer to Note 2
The Restaurant Group plc
Consolidated cash flow statement
26 weeks ended 3 July 2022 27 weeks ended 4 July 2021 53 weeks ended
3 January 2022
(Unaudited) (Unaudited) (Audited)
Note £'m £'m £'m
Operating activities
Cash generated from operations* 14 84.7 28.8 128.1
Interest received 0.2 - -
Interest paid (11.2) (14.3) (20.6)
Corporation tax paid (2.0) (0.2) (2.6)
Payment against provisions* (1.1) (0.1) (5.6)
Payment on exceptional items* (3.1) (7.8) (7.7)
Net cash flows from operating activities 67.5 6.4 91.6
Investing activities
Purchase of property, plant and equipment (20.9) (11.2) (31.1)
Purchase of intangible assets (0.1) (0.7) (2.7)
Investment in associate - (0.1) (0.3)
Net cash flows from investing activities (21.0) (12.0) (34.1)
Financing activities
Net proceeds from issue of ordinary share capital - 166.8 166.8
Repayment of obligations under leases 15 (29.9) (17.9) (48.7)
Repayment of borrowings 15 (89.1) (383.6) (383.6)
Drawdown of borrowings 15 - 330.0 330.0
Upfront loan facility fee paid 15 - (14.6) (14.6)
Derivative financial instrument fees paid (1.4) - (1.6)
Net cash flows used in financing activities (120.4) 80.7 48.3
Net (decrease)/increase in cash and cash equivalents (73.9) 75.1 105.8
Cash and cash equivalents at the beginning of the period 146.5 40.7 40.7
Foreign exchange movement in cash - - -
Cash and cash equivalents at the end of the period 72.6 115.8 146.5
* Restated refer to Note 2
Responsibility statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared in accordance with
UK-adopted 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,
Andy Hornby Kirk Davis
Chief Executive Officer Chief Financial Officer
7 September 2022 7 September 2022
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 the UK
adopted 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. 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 2
January 2022.
General information
The comparatives for the full year ended 2 January 2022 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 26-week period ended 3 July 2022, with the comparative
period to 27-week period ended 4 July 2021.
Going concern basis
The directors have adopted the going concern basis in preparing these interim
accounts after assessing the Group's principal risks including current
macroeconomic headwinds, relating to the cost-of-living crisis, elevated
levels of inflation and utility market volatility.
The Group has substantial liquidity with £184.2m in cash and cash
equivalents, or available facilities at the balance sheet date, and these
facilities are committed until at least March 2025. Further details of the
Group's debt facilities are in Note 15 to the Interim Accounts.
Whilst H1 trading is robust, the Directors are cautious about the ability for
our customers to continue their current level of spending in our restaurants
and pubs whilst the cost-of-living crisis continues and specifically the
unprecedented increases in UK household energy bills. In preparing the 'base
case' forecast for the period of going concern to 30 September 2023, the
Directors have assumed a lower level of sales growth for the next 12 months
versus 2019, which is also lower than the growth rates achieved in H1 as
reported in our half year results. The 'base case' forecast is also updated
for increased expectations of labour and input costs inflation as well as the
known increase in utilities costs given the vast majority of the Group's
volume is now fixed for 2023 and 2024. In this forecast, available liquidity
does not drop below £115m compared to a minimum liquidity covenant of £40m,
and Senior Secured Net Leverage does not exceed 2.0x against a covenant of no
more than 4.5x.
In addition, the Board has considered a 'stress case' scenario where sales
levels have been further reduced by 5% across all divisions, and an additional
2% of food and drink inflation has been included above the base case. In
this 'stress case' scenario, liquidity falls to a minimum of £94m, and Senior
Secured Net Leverage increases to 2.9x but still comfortably within the
covenants of the Group's banking facilities.
The Board have also considered a reverse stress case to determine the level by
which sales would need to fall from the 'base case' on a sustained basis over
the next 12 months before there is any risk of covenant breach in September
2023. Compared to the 'base case' sales would have to fall by 12% with
mitigating actions taken on both operating and capital expenditure, which are
within the control of the directors, before there is a risk of a covenant
breach. The Board considers that this level of revenue decline in the reverse
stress case is extremely unlikely, given the strength of business' performance
historically and on how our consumers have reacted in previous recessionary
environments. During the next 12 months if the Group were to experience a
sustained reduction in sales the Group would take broader mitigating actions
to manage any potential risk of a covenant breach. If it should be required,
the directors would proactively engage with its lending group and are
confident that covenant waivers would be provided as they were in similarly
extreme circumstances during the pandemic. Finally, we have not assumed any
Government intervention in our scenarios although the Board of Directors has a
reasonable expectation that the new Government will provide significant
support for both UK Households and UK Business' in navigating the near-term
challenges presented by both the energy and cost-of-living crisis.
The Board has a reasonable expectation that the Group has adequate resources
to continue in operational existence for the period to 30 September 2023,
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 of preparation.
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.
Other standards, interpretations and amendments issued but not yet effective
are not expected to have a material impact on the Group financial statements.
2 Restatement of comparatives
Where the Group holds a lease for a site that is no longer trading, a closed
site provision is recognised for the costs to be incurred until the expected
exit date. The Group's policy is that this should be all unavoidable costs
which includes utilities, service charges and insurance, and has also
historically included business rates. As a result of the additional guidance
issued in relation to IFRIC 21 "Levies" in 2022, the Group has reassessed its
policy in this area and concluded that business rates are a statutory
obligation rather than a contractual obligation. As such prior period
comparatives have been restated to remove business rates from closed site
provisions. The resulting restatements are disclosed below.
As originally disclosed Adjustment As restated
£m £m £m
Balance sheet at 2 January 2022
Current provisions (6.0) 2.8 (3.1)
Non-current provisions (9.3) 6.1 (3.2)
Deferred tax liability (41.9) (1.7) (43.6)
Retained earnings (169.7) 7.3 (162.4)
Balance sheet at 4 July 2021
Current provisions (5.1) 4.0 (1.1)
Non-current provisions (9.9) 8.5 (1.4)
Deferred tax liability (50.3) (2.4) (52.7)
Retained earnings (187.3) 10.1 (177.2)
Income statement for the 53 weeks ended 2 January 2022
Exceptional cost of sales (21.4) (2.3) (23.7)
Taxation (5.5) 0.4 (5.1)
Income statement for the 27 weeks ended 4 July 2021
Exceptional cost of sales (15.8) 1.2 (14.6)
Taxation 2.8 (0.2) 2.6
3 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 all of the segments meet the requirements for aggregation under IFRS 8.
Geographical segments
The Group trades primarily within the United Kingdom and generates revenue
from the operation of restaurants, with substantially all revenue generated
within the United Kingdom. The Group generates some 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.
4 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 2022 Adjustments for IFRS 16 H1 2022 Trading Exceptional items H1 2022 Total H1 2021* Total
Trading IFRS 16 (Note 4) IFRS 16 IFRS 16
IAS 17
£'m £'m £'m £'m £'m £'m
Revenue 423.4 - 423.4 - 423.4 216.8
Cost of sales (372.1) 12.5 (359.6) (46.1) (405.7) (228.2)
Gross profit/(loss) 51.3 12.5 63.8 (46.1) 17.7 (11.4)
Share of results of associate - - - - - (0.1)
Administration costs (28.4) 0.1 (28.3) (1.6) (29.9) (23.4)
Operating profit/(loss) 22.9 12.6 35.5 (47.7) (12.2) (34.9)
Interest payable (13.0) (9.0) (22.0) - (22.0) (22.8)
Interest receivable 0.3 0.1 0.4 5.3 5.7 0.1
Profit/(loss) before tax 10.2 3.7 13.9 (42.4) (28.5) (57.6)
EBITDA 41.7 30.5 72.2 (1.4) 70.8 21.1
Depreciation, amortisation and impairment (18.8) (17.9) (36.7) (46.3) (83.0) (55.9)
Operating profit/(loss) 22.9 12.6 35.5 (47.7) (12.2) (34.8)
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 2022 H1 2021*
£000 £000
Underlying trading profit/(loss) before tax 10.2 (19.8)
Removal of rent expenses 30.5 12.3
Net change in depreciation (17.8) (22.4)
Net change in interest payable (9.0) (9.6)
Interest receivable on net investments in subleases - 0.1
Trading profit/(loss) before tax under IFRS 16 13.9 (39.4)
*Restated refer to Note 2
5 Exceptional items
26 weeks ended 27 weeks ended 53 weeks ended
3 July 2022 4 July 2021 2 Jan 2022
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Included within cost of sales:
- Impairment charges relating to trading sites 45.4 1.3 19.6
- Estate closure - 0.3 0.6
- Estate restructuring 0.7 13.0 1.4
46.1 14.6 21.6
Included within administration costs:
- Business Transformation 1.6 - -
- Professional fees - 1.6 1.6
1.6 1.6 1.6
Included within interest payable:
- Gain made on derivative financial instruments at fair value through income (5.3) - -
statement
- Refinancing costs - 1.9 1.9
Exceptional items before tax 42.4 18.1 25.1
Impact of tax rate change - - 12.2
Tax effect of exceptional Items (6.0) 3.5 (2.4)
(6.0) 3.5 9.8
Net exceptional items for the period: 36.4 21.6 34.9
Impairment charges
An impairment charge has been recorded against certain assets to reflect
forecast results at our trading sites.
This charge comprises the below adjustments:
• An impairment of right of use assets of £24.4m (Note 12)
• An impairment of property, plant and equipment of £15.4m (Note
12)
• An impairment of goodwill of £6.5m (Note 12)
• Credit gains of £0.9m 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 12.
Estate restructuring
The Group closed sites in 2020 and 2021 following the impact of the
coronavirus pandemic. As a result of these closures, the Group has recognised
a further non-recurring charge of £0.7m which reflects an adjustment to the
estimated costs of exiting the sites following the restructuring programme.
This provision for closed sites relates to service charge, utilities,
insurance and exit costs. Business rates for closed sites are treated as an
exceptional item and expensed as incurred.
Gain made on derivative financial instruments at fair value through income
statement
The company has paid £3.1m for interest rate caps that now have a market
value of £8.8m. Of this £5.7m gain, £0.4m was recognised in 2021 leaving
£5.3m in H1 2022. The main reason for this gain is the increasing interest
rates in the year, and future expectations of SONIA rises over the term of the
interest rate caps.
Business Transformation
An exceptional charge of £1.6m has been incurred as a result of the ongoing
transformation activity to deliver synergies across the group. This cost
relates to the implementation of a SAAS common finance platform following the
acquisition of Wagamama and includes software dual running costs and
consultancy costs involved in the configuration and testing on the new system.
6 Net Interest Payable
26 weeks ended 27 weeks ended 53 weeks ended
3 July 2022 4 July 2021 3 January 2022
(Unaudited) (Unaudited) (Audited)
Bank interest payable 10.8 9.8 22.3
Unwinding of discount on lease liabilities 9.0 9.9 19.6
Amortization of facility fees 2.0 1.2 3.3
Other interest payable 0.2 - 0.5
Trading interest payable 22.0 20.9 45.7
Exceptional refinancing costs - 1.9 1.9
Interest payable 22.0 22.8 47.6
Bank interest receivable (0.1) - -
Interest receivable on loan to joint venture (0.2) - -
Unwinding of discounts on investments in subleases (0.1) (0.1) (0.1)
Trading interest receivable (0.4) (0.1) (0.1)
Gain made on derivative financial instruments at fair value (5.3) - (0.5)
through income statement
Interest receivable (5.7) (0.1) (0.6)
16.3 22.7 47.0
Total net finance charges
7 Tax
The tax net credit of £2.4m is composed of a trading current tax charge of
£3.3m, as well as a trading deferred tax charge of £0.3m. This is offset by
the tax impact on exceptional items, comprising a current tax credit of
£3.3m, as well as a deferred tax credit of £2.7m. The effective Corporation
tax rate on the adjusted loss (before exceptional items) is 25.7%. The
effective tax rate is above the corporation tax rate of 19% due principally to
non-deductible share-based incentive costs, and non-qualifying depreciation
and impairment.
8 Earnings per share
26 weeks ended 27 weeks ended 53 weeks ended
3 July 2022 4 July 2021* 3 January 2022*
(Unaudited) (Unaudited) (Audited)
Weighted average ordinary shares for the purposes of basic earnings per share 764,479,722 702,705,253 722,182,407
Effect of dilution - share options - 448,586 -
Diluted weighted average number of shares 764,479,722 703,153,839 722,182,407
£m £m £m
Profit/(Loss) for the year after tax (26.1) (55.0) (40.3)
Effect of exceptional items on earnings for the year 36.4 21.6 34.9
Adjusted profit/(loss) for the year after tax 10.3 (33.4) (5.4)
pence pence pence
Basic profit/(loss) per share for the period (3.4) (7.8) (5.6)
Effect of exceptional items on earnings for the year per share 4.8 3.1 4.8
Adjusted profit/(loss) per share for the period 1.3 (4.8) (0.7)
Diluted earnings per share on profit/(loss) for the period (3.4) (7.8) (5.6)
1.3 (4.8) (0.7)
Diluted earnings per share on adjusted profit/(loss) for the period
Diluted earnings per share information is based on adjusting the weighted
average number of shares for the purposes of basic and diluted earnings per
share 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.
The diluted earnings per share figures allow for the dilutive effect of the
conversion into ordinary shares of the weighted average number of options
outstanding during the year.
*Restated refer to Note 2
9 Intangible assets
Total
£'m
Net book value as at 3 Jan 2022 (audited) 599.9
Additions of software 0.9
Disposals of software (1.3)
Amortisation (1.4)
Impairment of intangible assets (Note 12) (6.5)
Net book value as at 3 Jul 2022 (unaudited) 591.6
10 Right-of-use assets and lease liabilities
Movements in the right of use assets during the period are shown below:
26 weeks ended 27 weeks ended 53 weeks ended
3 July 2022 4 July 2021 3 January 2022
(Unaudited) (Unaudited) (Audited)
£'m £'m £'m
Brought forward right of use assets 289.4 368.9 368.9
Additions 7.1 12.2 18.4
Disposals - (3.4) (4.6)
Depreciation (17.8) (22.4) (39.9)
Remeasurements 11.6 (40.2) (40.1)
Impairment (Note 12) (24.4) (12.7) (13.3)
Carry forward right of use assets 265.9 302.4 289.4
When indicators of impairment exist, right of use assets may be assessed for
impairment. As described in Note 12, all non-current assets were assessed at
3rd July 2022.
Movements in lease liabilities during the period are shown below:
£'m £'m £'m
Brought forward lease liabilities 410.4 483.8 483.8
Additions 7.1 12.2 18.4
Unwinding of discount on lease liabilities 9.0 10.0 19.6
Cash payments made (29.9) (18.0) (48.7)
Liabilities extinguished on disposals (2.3) (6.2) (9.5)
Remeasurements 8.1 (47.0) (53.2)
Carry forward lease liabilities 402.4 434.8 410.4
Analysed as:
Amount due for settlement within one year 61.6 75.4 73.1
Amount due for settlement after one year 340.8 359.4 337.3
Total lease liability 402.4 434.8 410.4
11 Property, Plant and equipment
£'m
Net book value at 3 January 2022 (Audited) 285.1
Additions 21.1
Disposals (1.3)
Depreciation (17.5)
Impairment (Note 12) (15.4)
Net book value at 3 July 2022 (Unaudited) 272.0
12 Impairment reviews
Due to the significant inflationary pressures expected to continue into 2023
and the increasing risk of a recession in the UK there is a 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 was obtained as at 9(th)
August 2022. 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 2022, we have
applied the pre-tax discount rate of 11.5% to all assets (2021: 10.6%). The
higher discount rate used in 2022, reflects the increasing interest rates in
the UK. This is however partially offset by a change in the financing
structure of the Group to have a relatively greater proportion of lease
liabilities which are discounted at a lower rate than debt and equity.
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.
Results of impairment review
Impairment has been recorded in a number of specific CGUs, as well as
impairment reversals. A net impairment charge of £39.8m (2021: £25.9m) has
been recognised, of which £15.4m was recorded against Property, Plant &
Equipment ("PPE") and a further £24.4m against Right of Use Assets. This is a
gross impairment charge of £45.2m offset by impairment reversals of £5.4m. A
further charge of £6.5m was recorded as impairment to the Goodwill of Pubs
acquired through Blubeckers Limited and Ribble Valley Inns Limited.
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 well as discount rates used.
The sensitivity analysis of forecast cash flows with a 5% reduction in sales
would give rise to an additional Group impairment of approximately £49.5m
across PPE and Right of Use Assets, made up of an increase in impairment of
£48.3m and a reduction in impairment reversals of £1.2m. Furthermore, this
reduction in sales would also give rise to impairment of the Goodwill in
Wagamama and Brunning & Price Limited of £77.9m and £51.5m respectively
and additional impairment of Goodwill in Blubeckers Limited of £18.6m.
An increase in the inflation rate compared to the forecasted cash flows of 2%
would give rise to additional impairment of approximately £25.4m, made up of
an increase in the impairment expense of £24.7m and a reduction in the
impairment reversals of £0.7m. Furthermore, this increase in inflation would
also give rise to impairment of the Goodwill in Brunning & Price Limited
of £20.2m and additional impairment of Goodwill in Blubeckers Limited of
£10.2m.
An increase in discount rate of 1% would give rise to additional impairment of
approximately £2.9m, made up of an increase in the impairment expense of
£2.7m and a reduction in the impairment reversals of £0.2m. Furthermore,
this increase in discount rate would also give rise to impairment of the
Goodwill in Brunning & Price Limited of £0.2m and additional impairment
of Goodwill in Blubeckers Limited of £3.4m.
13 Share capital
Share capital at 3 July 2022 amounted to £215.2m (2021: £215.2m). The number
of shares authorised, used and fully paid was 765,062,398 (2021: 765,036,713).
The shares have a par value of 28.125p (2021: 28.125p).
14 Reconciliation of profit before tax to cash generated from operations
26 weeks ended 27 weeks ended 53 weeks ended
3 July 2022 4 July 2021 2 January 2022
(Unaudited) (Unaudited) (Audited)
£'m £'m £'m
Loss on ordinary activities before tax* (28.5) (57.6) (35.2)
Net interest charges 16.3 20.8 45.1
Exceptional items (Note 5)* 47.6 18.1 27.4
Share of loss of associate - 0.1 0.3
Share-based payments 1.4 1.5 3.4
Depreciation and amortisation 36.7 42.2 78.1
Decrease/(increase) in inventory (0.8) - (0.9)
Decrease/(increase) in receivables (6.9) 8.4 5.1
(Decrease)/increase in creditors 18.8 (4.7) 4.8
Cash generated from operations 84.7 28.8 128.1
Reconciliation of net cash from operating activities to free cash flow
26 weeks ended 27 weeks ended 53 weeks ended
3 July 2022 4 July 2021 3 January 2022
(Unaudited) (Unaudited) (Audited)
Net cash flows from operating activities 67.5 6.4 91.6
Payment on exceptional items 3.1 7.8 7.4
Payment of obligations under leases (29.9) (17.9) (48.7)
Refurbishment and maintenance expenditure (15.6) (6.7) (19.0)
Payment against onerous lease provision (pre-IFRS 16) 3.9 3.6 13.4
Free cash flow 29.0 (6.8) 44.7
15 Long-term borrowings
At 3 July 2022 As at 4 July 2021 At 2 January 2022
(Unaudited) (Unaudited) (Audited)
Drawn Available facility Total facility Drawn Available facility Total facility Drawn Available facility Total facility
£'m £'m £'m £'m £'m £'m
Term loan 240.9 - 240.9 330.0 - 330.0 330.0 - 330.0
Revolving credit facilities - 111.6 120.0 - 111.6 120.0 - 111.6 120.0
Total banking facilities 240.9 111.6 360.9 330.0 450.0 330.0 450.0
Unamortised loan fees (9.9) (14.0) (11.9)
Long-term borrowings 231.0 316.0 318.1
Cash and cash equivalents 72.6 72.6 115.8 115.8 146.5 146.5
Pre-lease liability net debt 158.4 200.2 171.6
Lease liabilities 402.4 434.8 410.4
Net debt 560.8 635.0 582.0
Cash headroom 184.2 227.4 258.1
The Group made total principal repayments of £89.1m against the term loan in
the 26 weeks to 3 July 2022.
The Group has covenants over both the term loan and the revolving credit
facilities (RCF). Until 31 December 2022, both facilities require a minimum
liquidity level of £40m which is measured as the total of cash and undrawn
facilities. On the term loan, from 31 December 2022, the covenant requires
total net debt to be no more than 5.0x EBITDA, reducing to 4.5x at June 2023
and 4.0x at December 2023 and thereafter.
On the RCF, the Group is required to maintain total net debt to EBITDA below
5.5x at 31 December 2022, and 4.75x at 30 June 2023 and 4.25x at December 2023
and thereafter. In addition, the ratio of RCF debt to EBITDA can be no more
than 1.5x from June 2022, when the RCF is drawn.
The available revolving credit facilities are reduced from the total facility
by £8.4m of letters of credit issued to external suppliers.
16 Subsequent Events
On 12 July 2022, The Restaurant Group completed the acquisition of the entire
share capital of Barburrito Group Limited for a consideration of £7m, on a
cash free basis. This adds sixteen Mexican style fast-casual sites to the
Group's estate in high-footfall locations across a range of formats
Glossary
Measure Closest GAAP Measure Reconciliation Description
Adjusted diluted EPS Diluted EPS Note 8 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, including the effect of dilutive potential ordinary shares.
Adjusted EBITDA Operating Profit Income Statement 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 EPS Note 8 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 profit Operating Profit Income Statement & Note 4 for IAS 17 basis Operating profit prior to the impact of Exceptional items.
Adjusted operating margin N/A Income Statement & Note 4 for IAS 17 basis Calculated as the Operating profit as a percentage of Revenue. For the
'Adjusted' basis this is using the profit and revenue prior to Exceptional
items
Adjusted profit before tax Profit before tax Income Statement & Note 4 for IAS 17 basis Calculated by taking the profit before tax of the business pre-Exceptional
items.
Adjusted tax charge Tax on profit from ordinary activities Income Statement Calculated by taking the tax of the business pre-Exceptional items.
Effective adjusted tax rate N/A Note 7 & Financial Review Calculated as the tax expense as a percentage of profit before tax. For the
'Adjusted' basis this is using the tax and profit prior to Exceptional items.
Cash headroom Cash & Cash equivalents Note 15 Calculated as the funds available to the business through either its Cash
& cash equivalents balance or through undrawn facilities, less letters of
credit.
Capital expenditure Net cash flow from investing activities N/A This is calculated as the total of Development capital expenditure and
Refurbishment and maintenance expenditure and is the cash outflow associated
with the acquisition of Property, plant and equipment, intangibles and
investments in the US joint venture.
Development capital expenditure Net cash flow from investing activities N/A This is the Capital expenditure relating to profit-generating projects upon
which we expect a commercial return in future years.
EBITDA Operating profit Income Statement & Note 4 for IAS 17 basis Earnings before interest, tax, depreciation, amortisation and impairment.
Exceptional items N/A Income Statement and Note 5 Those items that are material, and not related to the underlying trade of the
business.
Free cash flow Net cash flow from operating activities Financial Review Adjusted EBITDA (IAS17 basis) less working capital and non-cash adjustments
(excluding exceptional items), tax payments, interest payments and
Refurbishment and maintenance expenditure.
Like-for-like sales N/A N/A This measure provides an indicator of the underlying 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 (traded for at least 65
weeks) 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.
Minimum liquidity N/A N/A The minimum liquidity is a financial covenant required under the terms of our
loans to have a minimum of both available undrawn facilities plus Cash and
cash equivalents of at least £40 million.
Net debt Long-term borrowings Financial Review Net debt is calculated as the net of all borrowings less cash and cash
equivalents, plus the IFRS 16 Lease liabilities.
Pre-lease liability net debt Long-term borrowings Financial Review As above Net Debt but excluding the IFRS 16 Lease liabilities.
Refurbishment and maintenance expenditure Net cash flow from investing activities Financial Review This is the Capital expenditure relating to projects to maintain and refurbish
our estate. No incremental financial return is expected on this expenditure.
Return on Invested Capital (ROIC) N/A N/A Outlet EBITDA (pre-IFRS 16 and exceptional charges)/initial capital invested.
Trading business N/A N/A Represents the performance of the business before exceptional items.
TSR N/A N/A Total Shareholder Return over a period. Total shareholder return (TSR) is
calculated as the overall appreciation in the share price, plus any dividends
paid, during a period of time; this is then divided by the initial purchase
price of the stock to arrive at the TSR.
Shareholder information
Directors Registrar
Ken Hanna 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
Loraine Woodhouse Citigroup Global Markets Limited
Independent non-executive Director Citigroup Centre
33 Canada Square
Company Secretary London E14 5LB
Andrew Eames
Investec Bank plc
Head office 30 Gresham Street
(and address for all correspondence) London EC2V 7QP
5-7 Marshalsea Road
London SE1 1EP
Telephone number
020 3117 5001
Company number
SC030343
Registered office
1 George Square
Glasgow G2 1AL
1 (#_ftnref1) Barburrito was acquired on the 12(th) of July 2022
2 (#_ftnref2) This relates to own billed and managed sites and excludes
landlord billed sites at shopping centres and airport concession sites
3 (#_ftnref3) Includes electricity, gas & LPG. Where we control the
specific supply point for contracting. Excludes landlord supplies
4 (#_ftnref4) Pre-IFRS 16 and exceptional charges
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