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The Restaurant Group Plc - Final Results

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The Restaurant Group plc ("TRG")

Final results for the 52 weeks ended 29 December 2019

2019 Highlights

Delivering the benefits of the Wagamama transaction

  • Market-leading like-for-like (LFL) sales performance of +8.5%
  • Cost synergies ahead of plan, site conversion programme well progressed
  • US Joint Venture (JV) established after year-end to facilitate capital-light growth plan

Growing our Pubs and Concessions businesses

  • Concessions LFL sales growth of +4.1% well ahead of passenger growth; strong presence in new Manchester terminal secured
  • Pubs LFL sales growth +4.0% consistently outperforming the market; healthy pipeline of new sites in 2020

Optimising our Leisure brands

  • LFL sales decline of 2.8%, representing an improvement on previous years
  • Delivery sales performing well, supported by targeted operational initiatives to improve food offering and brand proposition
  • Overall estate size reduced by 18 sites to 350 sites via closures and conversions to Wagamama

Andy Hornby, Chief Executive Officer, commented:

"Having joined the business in August last year I am particularly pleased with the continued and significant progress made following the acquisition of Wagamama and the integration of the business into the Group, which has transformed the Group's growth trajectory and momentum. 

Our three growth businesses of Wagamama, Concessions and Pubs are all out-performing their respective markets and have clear potential for further growth.  I am also acutely aware of the challenges facing our Leisure business and the wider casual dining sector.   

It is therefore clear that our strategic priorities need to evolve in order to maximise shareholder value in the medium term.  Following extensive review we have defined three clear strategic priorities for the next two years:

  • Grow our Wagamama, Concessions and Pubs businesses;
  • Rationalise our Leisure business; and 
  • Accelerate our deleveraging profile

In order to support these strategic priorities, the Board has taken the decision to temporarily suspend the dividend.  This will allow us to continue investing in our three high growth businesses, whilst facilitating an acceleration of our Leisure estate rationalisation and reducing our net debt. 

We have made an encouraging start to the new financial year with like-for-like sales up 5.3% for the first six weeks of 2020."

2020 to 2021 Strategic priorities

Grow our Wagamama, Concessions and Pubs businesses

  • Continue selective approach to new sites generating strong returns
  • Maintain like-for-like sales outperformance versus respective benchmarks

Rationalise our Leisure business

  • Accelerate rationalisation of the estate from 350 sites today to a target of 260-275 sites by the end of 2021

Accelerate our deleveraging profile

  • Target a reduction in net debt / EBITDA leverage  from 2.1x today to below 1.6x by the end of 2021

Temporary suspension of dividend to facilitate strategic priorities

2019 Financial summary

  • Group like-for-like sales up 2.7%, with total sales up 56.4% to £1,073.1m (2018: £686.0m)
  • Adjusted1 profit before tax of £74.5m (2018: £53.2m).  Statutory loss before tax of £37.3m (2018 Statutory profit: £13.9m)
  • Adjusted1 EBITDA of £136.7m (2018: £87.9m)
  • Exceptional pre-tax charge of £111.8m (H1 2019: £115.7m, H2 2019: (£3.9m) credit) primarily related to impairment in our Leisure business recorded in the first half of 2019 (2018: £39.2m)
  • Adjusted1 EPS of 11.9p (2018: 14.7p).  Statutory loss per share of 8.2p (2018 earnings per share: 2.4p)
  • Operating cash flow of £140.5m (2018: £88.3m)
  • Net bank debt of £286.6m (2018: £291.1m) with net debt/EBITDA at 2.1x
  • No full year dividend declared to facilitate new strategic priorities

Current trading

Current trading is encouraging with like-for-like sales up 5.3% for the first six weeks of 2020.