Interim Results
City Centre Restaurants PLC
18 September 2001
City Centre Restaurants plc
Interim Results for the six months to 30 June 2001
City Centre Restaurants plc, operates 296 branded restaurants across the UK.
Its portfolio of brands includes Garfunkels, Frankie and Benny's, Caffe Uno,
Est Est Est, Wok Wok, Chiquito's and Deep Pan Pizza which is being sold..
Financials
Half year ended Half year ended % Change
30 June 2001 30 June 2000
£m £m
Turnover 109.2 103.1 +6%
EBITDA * 14.2 13.5 +5%
Operating profit * 7.6 6.9 +10%
Profit before tax * 5.5 5.2 +6%
Dividends per share 0.75p 0.75p -
Adjusted earnings per share * 2.15p 2.05p +5%
* Adjusted figures are stated before exceptional items and losses on property
disposals
o Strong trading from Frankie & Benny's and Airport locations
o Caffe Uno and Est Est Est recovering during the period
o 49 Deep Pan Pizza restaurants sold
o Benefits of management action earlier in the year now showing through
in results
o The Group continues to be focused on creating a 'core' portfolio of
performing brands
o Board and brand management reviewed and restructured
o Group well placed at the value end of the market in challenging
market conditions
o Foundation laid and actions taken to continue to restore shareholder
value
Alan Jackson, Chairman, said:
'Much has been achieved over the past few months to position the Group's
brands for growth. The Board is resolved only to focus on the brands with the
most potential. We have agreed to sell Deep Pan Pizza in the first phase of
our disposal programme and as a whole the Group is in much better shape both
operationally and financially.'
18 September 2001
ENQUIRIES:
City Centre Restaurants plc Tel: 020 7747 7750
Alan Jackson, Executive Chairman
Andrew Guy, Chief Executive
Andrew Page, Finance Director
College Hill Tel: 020 7457 2020
Matthew Smallwood
Justine Warren
City Centre Restaurants plc
Interim Results for the Six Months to 30 June 2001
Chairman's Statement
The period under review has seen some of the benefits of changes implemented
as a result of the restructuring within the business. The Group has developed
a renewed focus on delivering to our customers the value proposition upon
which its brands built their reputations.
In the strategic review, which the Group commenced at the end of last year,
management committed to refocus on a reduced number of brands commencing with
the disposal of Deep Pan Pizza and OK Diners which have now been effected.
The Group will continue to make disposals and to operate the brands that offer
the best prospects and return on investment.
Market conditions have been mixed across our brand portfolio during the first
half, demonstrating the benefit of offering a broad range of styles in the
high street, airports, leisure parks and Central London.
Results *
Turnover was 6% ahead at £109.2m (2000: £103.1m). Adjusted operating profit
increased by 10% to £7.6m (2000: £6.9m) with adjusted operating margins
maintained at 7% (2000: 7%). Adjusted profit before tax increased by 6% to £
5.5m (2000: £5.2m). Adjusted earnings before interest, tax, depreciation and
amortisation (EBITDA), a measure of the Group's cash generative capacity,
increased by 5% from £13.5m to £14.2m. Adjusted earnings per share was 2.15p
against 2.05p on the same basis in 2000, an increase of 5%. The basic loss
per share was (3.8p) (2000 basic earnings per share : 1.97p)
Exceptional Costs
The results in the period have been impacted by a number of one-off
exceptional items arising due to the considerable restructuring within certain
brands (the costs of which were £1.1m) together with a more prudent view of
the carrying value of certain assets, in particular those employed in the Wok
Wok brand. Consequently, an impairment provision of £5.3m has been made
against the carrying value of this business.
Additionally, a reassessment of the economic life of certain of the Group's
fixed assets has resulted in an additional depreciation charge of £0.1m during
the first half, which is separately identified as an exceptional item. We
anticipate a similar level of additional depreciation in the second half.
We have also reviewed anticipated commitments in respect of our obligations on
properties that are closed awaiting subletting / assignment or are subject to
leases with onerous terms. The Board has determined that it is appropriate to
make a provision in respect of estimated liabilities relating to these
non-core properties and this is reflected in an exceptional charge of £3.0m.
*Adjusted figures are stated before exceptional items and losses on property
disposals.
As the Group continues to review its businesses and structure it is likely
that a further exceptional restructuring cost of £0.2-0.3m will be incurred in
the second half of the year.
Interim Dividend
The Directors have declared a maintained interim dividend of 0.75p per share
(2000: 0.75p per share) to be paid on 31 October 2001 to shareholders on the
register on 28 September 2001.
Operations
DEVELOPING BRANDS:
Total Turnover: £55.2m Profit: £8.6m Operating Margin: 15.6%
Frankie & Benny's
Turnover: £24.2m Increase/(decrease) in profit: +13.5%+13.5%
Like for like sales: +5.0%
One new restaurant opened during the period, to bring the total to 61 units
for this brand. On both an underlying basis and from the new restaurant
opening, we have seen a continued excellent performance which justifies our
ongoing roll-out of this brand. Since the period end, two new restaurants have
opened (Lincoln and Alcabendos, Spain) and we expect to open five more Frankie
& Benny's restaurants in the second half. This is an extremely well-managed
brand and an excellent concept which continues to deliver an exemplary
performance.
Caffe Uno
Turnover: £21.0m Increase/(decrease) in profit: (0.5%)
Like for like sales: (2.0%)
The Group currently operates 70 restaurants under this brand, two of which
were new openings during the period under review. One was converted to
another brand. Although like for likes fell 2.0% for the period as a whole,
these have now started to recover and in June like for like sales were 2.0%
ahead.
Est Est Est
Turnover: £10.0m Increase/(decrease) in profit: (10.9%)
Like for like sales: (7.0%)
22 restaurants trade under this brand. The extensive changes that were
implemented in the last quarter of 2000 and the first quarter of 2001,
including injecting new management and initiating a return to the original
successful format has enabled trading at this brand to be stabilised.
Although like for like sales were 7.0% down as a whole there are recent signs
that previous levels of trade are returning.
DEVELOPED BRANDS:
Total Turnover: £38.4m Profit: £5.3m Operating Margin: 13.8%
Garfunkel's & Airport Restaurants
Turnover: £25.2m Increase/(decrease) in profit: (4.5%)
Like for like sales: +0.6%
The Group continues to operate 51 restaurants under this brand, 22 of which
are situated at UK airport locations. The majority of the non airport
locations are based in Central London and are largely dependent upon tourist
and walk-by trade. It has been well publicised that the London restaurant
market and the tourist trade have been affected by external factors over
recent months. However, the strength of this brand is clearly demonstrated by
turnover being maintained at last year's levels. By contrast, the airport
restaurants outperformed even our best expectations. This pattern has
continued since the end of the period.
Chiquito's
Turnover: £13.2m Increase/(decrease) in profit: +11.7%
Like for like sales: +7.0%
Chiquito's currently operates 27 Mexican restaurants and has benefited from
the refurbishment of the flagship restaurant in Leicester Square, which is
included in the like for like statistics quoted above. Since it reopened in
April 2000, this restaurant has performed very well, with the rest of the
brand holding its own.
NON-CORE BRANDS:
Total Turnover: £15.5m Loss: £0.3m Operating Margin: (1.7%)
Wok Wok
Turnover: £4.4m Increase/(decrease) in profit: (87.7%)
Like for like sales: (12.0%)
Trading at this brand continues to be disappointing despite simplifying the
operation and introducing new management. Although improvement is evident in
some of the units, we do not anticipate a return to the level of profits
achieved in 2000 during the current year.
The Board is currently considering the benefits to shareholders of withdrawing
from this business.
Deep Pan Pizza
Turnover: £11.1m Increase/(decrease) in profit: N/A
Like for like sales: + 4.0%
Recently, the Group exchanged contracts to sell 49 of the 54 remaining Deep
Pan Pizza restaurants with completion due in December 2001. The consideration
is £4.0m, £1.0m of which is payable in cash upon completion. The remaining
five restaurants are in various stages of negotiation for disposal.
The Board
The last few months has seen significant change to the composition of the
Group's Board. I joined the Group as Chairman on 20 March. Henry King and
Michael Williams-Jones retired from the Board at the AGM in June. John
Wittich stepped down from the role of Finance Director in May and we are
pleased to welcome Andrew Page who joined the Group as Finance Director in
June.
We have further strengthened the Board through the appointment of Andrew
Thomas as a Non Executive Director. Subsequent to the half year end Ian
Hannah joined the Board in the same capacity. Both of our new Non Executives
Directors bring a vast wealth of experience of our sector and I am delighted
that they have chosen to join the company.
Strategy
It is the Group's intention to continue to reduce the number of brands it
operates so that the Group emerges with a portfolio of core, growth brands.
The Group will only expand the brands that are performing well and have
potential.
Current Trading & Future Prospects
Whilst current market conditions are uncertain, the Company is in better
operational and financial health and we committed to achieving our targets.
We will continue to dispose of underperforming brands and as the Group reduces
in size, management will be able to focus its time more effectively in
extracting the maximum potential from our best brands. City Centre's brands
are positioned at the value end of the spectrum and therefore are not as
exposed to a weakening economy as high spend per head operations. City Centre
has some excellent brands with much potential, it is our task now to maximise
their performance and to further restore shareholder value.
Alan Jackson
Executive Chairman
City Centre Restaurants plc
DISCLOSURE OF RESULTS
Half year ended 30 June 2001
Turnover EBITDA EBITDA Profit Margin
£'000 £'000 % £'000 %
Developing Brands 55,244 11,904 21.5% 8,609 15.6%
Developed Brands 38,445 7,509 19.5% 5,297 13.8%
Principal Trading Brands 93,689 19,413 20.7% 13,906 14.8%
Deep Pan Pizza 11,102 -24 -0.2% -309 -2.8%
Wok Wok 4,445 424 9.5% 51 1.1%
OK Diners - - - - -
Non core Brands 15,547 400 2.6% -258 -1.7%
Total 109,236 19,813 18.1% 13,648 12.5%
Pre-opening costs -34 -0.0% -34 -0.0%
Administration -5,632 -5.2% -6,002 -5.5%
EBITDA/ 14,147 13.0% 7,612 7.0%
Operating profit *
Half year ended 30 June 2000
Turnover EBITDA EBITDA Profit Margin
£'000 £'000 % £'000 %
Developing Brands 50,861 11,186 22.0% 8,274 16.3%
Developed Brands 35,943 7,330 20.4% 5,320 14.8%
Principal Trading Brands 86,804 18,516 21.3% 13,594 15.7%
Deep Pan Pizza 11,366 223 2.0% -661 -5.8%
Wok Wok 3,791 659 17.4% 414 10.9%
OK Diners 1,179 137 11.6% 13 1.1%
Non core Brands 16,336 1,019 6.2% -234 -1.4%
Total 103,140 19,535 18.9% 13,360 13.0%
Pre-opening costs -748 -0.7% -748 -0.7%
Administration -5,313 -5.2% -5,686 -5.5%
EBITDA/ 13,474 13.1% 6,926 6.7%
Operating profit *
* EBITDA/operating profit is stated before exceptional costs
City Centre Restaurants plc
GROUP PROFIT & LOSS ACCOUNT
FOR THE HALF YEAR ENDED 3O JUNE 2001
Half year ended 30 June 2001 Half Year ended
Before year ended 31
Exceptional Exceptional 30 June December
items items Total 2000 2000
£'000 £'000 £'000 £'000 £'000
Turnover 109,236 109,236 103,140 217,608
Cost of sales:
Excluding pre-opening
costs and exceptional
items (95,588) (95,588) (89,780) (186,001)
Pre-opening costs (34) (34) (748) (982)
Provision for
diminution in
value of tangible
fixed assets (5,253) (5,253) - (19,975)
Provision in respect
of property
liabilities (note 2) (3,102) (3,102)
(95,622) (8,355) (103,977) (90,528) (206,958)
Gross Profit 13,614 (8,355) 5,259 12,612 10,650
Administrative
expenses:
Excluding
exceptional items (6,002) (6,002) (5,686) (10,883)
Exceptional items
(note 3) (1,076) (1,076) - (1,147)
(6,002) (1,076) (7,078) (5,686) (12,030)
Operating Profit/(Loss) 7,612 (9,431) (1,819) 6,926 (1,380)
(Loss) and provision
for loss on disposal
of tangible fixed assets (2,335) (2,335) (150) (459)
Interest payable (net) (2,107) (2,107) (1,721) (3,768)
Profit/(loss) on Ordinary
Activities before
Taxation 5,505 (11,766) (6,261) 5,055 (5,607)
Tax on profit/ (loss)
on ordinary
activities (note 4) (1,332) 267 (1,065) (1,220) (3,187)
Profit/(loss) on
Ordinary
Activities
after Taxation 4,173 (11,499) (7,326) 3,835 (8,794)
Retained earnings
brought forward 6,883 22,303 22,303
Dividends (note 5) (1,457) (1,457) (6,626)
Retained (Loss)/
Profit carried
forward (1,900) 24,681 6,883
Earnings/(loss)
per Share (note 6)
Basic (loss)/
Earnings per share (3.77)p 1.97p (4.53)p
Adjusted basic
earnings per share 2.15p 2.05p 6.26p
Diluted (loss)/
Earnings per share (3.77)p 1.97p (4.53)p
Adjusted diluted
earnings per share 2.14p 2.05p 6.26p
All amounts relate to continuing activities.
There were no recognised Gains or Losses other than the profit for the period
Half Half Year ended
year ended year ended 31
30 June 30 June December
2001 2000 2000
£'000 £'000 £'000
Reconciliation of Movements
in Shareholders' Funds
Total recognised gains and losses
for the period (7,326) 3,835 (8,794)
Dividends (1,457) (1,457) (6,626)
Total movements during the period (8,783) 2,378 (15,420)
Shareholders' funds at the
beginning of the period 65,651 81,071 81,071
Shareholders' funds at the
end of the period 56,868 83,449 65,651
City Centre Restaurants plc
GROUP BALANCE SHEET
AS AT 30 JUNE 2001
31
30 June 30 June December
2001 2000 2000
£000s £000s £000s
FIXED ASSETS
Tangible assets 150,798 174,766 158,505
CURRENT ASSETS
Stocks 2,134 2,130 2,634
Debtors 13,041 10,752 8,428
Cash at Bank and in hand 3,187 240 5,116
18,362 13,122 16,178
CREDITORS
Amounts falling due within one year (43,312) (68,049) (42,704)
NET CURRENT LIABILITIES (24,950) (54,927) (26,526)
TOTAL ASSETS LESS CURRENT LIABILITIES 125,848 119,839 131,979
CREDITORS
Amounts falling due after one year (60,985) (31,641) (61,313)
PROVISION FOR LIABILITIES AND CHARGES
Deferred tax (5,015) (4,749) (5,015)
Property provision (note 2) (2,980) - -
56,868 83,449 65,651
CAPITAL AND RESERVES
Called up share capital 48,576 48,576 48,576
Share premium account 10,192 10,192 10,192
Profit and loss account (1,900) 24,681 6,883
56,868 83,449 65,651
City Centre Restaurants plc
GROUP STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 30 JUNE 2001
Group Statement of Cash Flows
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2001 2000 2000
£'000 £'000 £'000
Net Cash Inflow from Operating 11,788 15,234 32,537
Activities (note 1)
Returns on Investments and Servicing
of Finance
Interest received 34 5 65
Interest paid (2,141) (1,726) (3,833)
Net Cash Outflow from Returns on
Investments and Servicing of Finance (2,107) (1,721) (3,768)
Taxation
Corporation tax paid (690) (118) (3,277)
Capital Expenditure
Payments to acquire tangible fixed (6,841) (19,329) (32,679)
assets
Receipts from sales of tangible fixed 1,418 705 394
assets
Net Cash Outflow for Capital (5,423) (18,624) (32,285)
Expenditure
Acquisitions and Disposals
Payment and expenses paid for the
acquisition
of the minority interest in Est Est - (2,038) (2,038)
Est Group
(2,038) (2,038)
Equity Dividends paid (5,169) (5,168) (6,626)
Cash Outflow before Financing (1,601) (12,435) (15,457)
Financing
New loans received - - 30,000
Loans repaid (328) (329) (657)
(328) (329) 29,343
(Decrease)/Increase in Cash in the (1,929) (12,764) 13,886
period
City Centre Restaurants plc
NOTES TO THE ACCOUNTS
FOR THE HALF YEAR ENDED 30 JUNE 2001
Notes to the Accounts
1.Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
Half year Half year Year
ended ended ended 31
30 June 30 June December
2001 2000 2000
£'000 £'000 £'000
Operating profit (1,819) 6,926 (1,380)
Exceptional item ( provision for
diminution in )
(value of tangible fixed assets) 5,253 - 19,975
Exceptional item (provision in respect 2,980 -
of non-core units)
Depreciation 6,535 6,548 13,464
Exceptional depreciation 122
Decrease/(Increase) in stocks 500 289 (215)
(Increase) in debtors (4,613) (2,758) (175)
Increase in creditors 2,830 4,229 868
Net Cash Inflow from Operating Activities 11,788 15,234 32,537
2.Provision in respect of property liabilities
Half year Half year Year
ended ended ended 31
30 June 30 June December
2001 2000 2000
£'000 £'000 £'000
Provision in respect of non-core units 2,980 - -
Exceptional depreciation following the
revision of
the economic life of certain assets 122 - -
3,102 - -
3.Analysis of exceptional administrative costs
Half year Half year Year
ended ended ended 31
30 June 30 June December
2001 2000 2000
£'000 £'000 £'000
Redundancy and restructuring costs 1,076 - 1,147
The above exceptional charge relates to costs incurred following management's
strategic review of the Group
4.Taxation
The taxation charge has been calculated by reference to the net profit for
the period. The effective tax rate is less than the standard rate of
corporation tax because full provision has not been made for deferred tax.
5. Dividend
The directors have declared an interim dividend of 0.75p (2000: 0.75p) per
share which will be paid on 31October 2001 to Ordinary Shareholders on the
Register at the close of business on 28 September 2001.
6. Earnings/(loss) per share
The calculation of basic (loss)/earnings per share, is based on the profit
after taxation and on the weighted average number of ordinary shares in issue
during the period (six months ended 30 June 2001: 194,301,732 shares; six
months ended 30 June 2000: 194,301,732 shares and year ended 31 December
2000: 194,301,732 shares). Adjusted basic earnings per share represents the
basic earnings/(loss) per share, calculated as set out above, as adjusted for
the effect of the exceptional items and loss and provision for loss on the
disposal of tangible fixed assets. The calculation of diluted (loss)/earnings
per share is based on 194,552,997 shares (six months ended 30 June 2000:
194,328,919 shares and year ended 31 December 2000: 194,301,732 shares).
Adjusted diluted earnings per share represents the diluted (loss)/earnings
per share, calculated as set out above, as adjusted for the effect of the
exceptional items and loss and provision for loss on the disposal of tangible
fixed assets.
7.Reconciliation of Changes in Cash to the Movement in Net (Debt)/Funds
Half year Half year Year
ended ended ended 31
30 June 30 June December
2001 2000 2000
£'000 £'000 £'000
At the beginning (56,853) (41,396) (41,396)
of the period
Movements during
the period:
New loans drawn - (30,000)
down
Loans repaid 328 329 657
Cash (1,929) (12,764) 13,886
(outflow)/inflow
At the end of the (58,454) (53,831) (56,853)
period
Represented by:
At the Cash Flow Other At the
beginning Movements Movements end
of the during the during the of the
period period period period
£'000 £'000 £'000 £'000
Cash at bank and 5,116 -1,929 - 3,187
in hand
Bank loan due (656) 328 (328) (656)
within one year
Bank loans due (61,313) 0 328 (60,985)
after one year
(56,853) (1,601) - (58,454)
Interim Financial Statements
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's 2000 statutory accounts.
The statements were approved by a duly appointed committee of the Board of
Directors on 17 September 2001 and are unaudited. The auditors have carried
out a review and their report is set out below.
The figures for the year ended 31 December 2000 have been extracted from the
statutory accounts which have been filed with the Registrar of Companies. The
former auditors' report on those accounts was unqualified and did not contain
any statement under section 237 of the Companies Act 1985.
INDEPENDENT REVIEW REPORT TO
City Centre Restaurants plc
Introduction
We have been instructed by the company to review the financial information
for the six months ended 30 June 2001 on pages 7 to 14. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom.
A review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification
of assets, liabilities and transactions. It is substantially less in scope
than an audit performed in accordance with United Kingdom Auditing Standards
and therefore provides a lower level of assurance than an audit. Accordingly,
we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 30 June 2001.
BDO Stoy Hayward
London
17 September 2001
Copies of this report will be sent to all shareholders and further copies of
this report and the Annual Report 2000 are available from the Company
Secretary at 56/62 Wilton Road, London SW1V 1DE (Telephone: 020 7630 2800).
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