Interim Results

RNS Number : 8019M

Restaurant Group PLC

30 August 2013

 



The Restaurant Group plc

Interim results for the 26 weeks ending 30 June 2013

The Restaurant Group plc ("TRG" or "the Group") operates over 400 restaurants and pub restaurants throughout the UK.  Its principal trading brands are Frankie & Benny's, Chiquito and Garfunkel's. In addition it operates a Pub restaurant business and a Concessions business which trades principally at major UK airports.

·      Excellent performance across the whole business:

- Total revenue increased 11.5% to £280m (2012: £252m) - Like-for-like sales increased by 5%

- EBITDA increased by 13% to £46.9m (2012: £41.7m)

- Profit before tax increased by 15% to £30.0m (2012: £26.1m)

- EPS rose 16% to 11.2p (2012: 9.6p)

·      TRG is strongly cash generative; operating cash flow up 22% at £47.1m (2012: £38.5m) 

·      Net debt further reduced to £27.1m (2012: £38.4m)

·      Interim dividend increased by 17% to 5.25p per share (2012: 4.5p)

·      Continuing new site development

-     Seven new sites opened in the first half year

-     A further four new sites opened to date in the second half year

-     30-35 new sites for 2013 as a whole

·      Current trading strong, with year to date like-for-like sales growth for the 34 weeks to 25 August 2013 at 4.25%

·      The Board is confident of another year of continued good progress in 2013

Andrew Page, Chief Executive of The Restaurant Group plc commented as follows:

"This is another strong performance from The Restaurant Group, with an 11.5% increase in revenues and a 16% increase in earnings. All of our brands grew like-for-like sales and profits, with the Group's margins nicely ahead of the prior year. Free cash flow was also significantly higher, being 30% ahead of the prior year and net debt reduced by more than £11m to £27m.

"We opened seven new restaurants in the first half, have opened a further four since the half year and expect to open between 30 and 35 new restaurants during 2013. Our new restaurants are trading ahead of expectations, are on track to deliver high returns and the forward pipeline of new sites to 2015 and beyond is the best we've seen for many years and the quality is first class.

"As always, our team has worked extremely hard to deliver these results; we are fortunate to have such a professional and dedicated team at TRG whose efforts are now focused on ensuring that we maintain this strong momentum going forward. After eight months, our like-for-like sales are 4.25% ahead of last year, with August's like-for-like sales coming in ahead of the year to date run rate and, notwithstanding the fact that we enjoyed a very strong final quarter last year, we are confident of delivering another year of further profitable progress."

30 August 2013

Enquiries:

The Restaurant Group
Andrew Page, Chief Executive Officer	020 7457 2020 (today)
Stephen Critoph, Group Finance Director	020 3117 5001 (thereafter)
College Hill
Matthew Smallwood	020 7457 2020

Chairman's statement

The Group has traded well during the first six months of 2013, delivering strong growth in revenues, margins and profits.  Each of the Group's businesses recorded good levels of like-for-like sales growth and the Group, as a whole, delivered like-for-like growth of 5%.  Despite absorbing the anticipated inflationary cost pressures, the Group's operating profit margin increased by 30 basis points.  This is reflective of the strong sales growth of 11.4% during the first half, which resulted from more people dining in our restaurants ("covers" growth), higher levels of spend per head (partly through menu price increases and partly through customers trading up), sales contributions from new restaurants and good cost controls.  Promotional activities during the first half were at a lower level than for the comparable period in 2012.

During the first six months we opened seven new restaurants and since June we have opened a further four restaurants.  Our new openings are performing strongly and we anticipate opening between 30-35 new restaurants during the year.

Results

During the first half the Group delivered increases in revenue, margins, profits and earnings per share.  Revenue increased by 11.4% to £280m (2012: £252m), EBITDA increased by 12.6% to £46.9m (2012: £41.7m), operating profit increased by 14.2% to £31.1m (2012: £27.3m) and operating margins improved by 30 basis points to 11.1% (2012: 10.8%) reflecting strong sales and tight cost controls.  Profit before tax increased by 15.2% to £30.0m (2012: £26.1m) and earnings per share increased by 15.9% to 11.2p (2012: 9.6p).  Again, profits have been converted into cash at a very healthy rate and, for the first half, operating cash flow was £47.1m (2012: £38.5m) with free cash flow of £27.9m (2012: £21.4m).

As a result of this strong performance the Board is declaring an interim dividend of 5.25p per ordinary share (2012: 4.50p), an increase of 17%.  The interim dividend will be paid on 9 October 2013 to shareholders on the register on 13 September 2013 and the shares will be marked ex-dividend on 11 September 2013.

Frankie & Benny's (226 units)

Frankie & Benny's traded strongly during the first half of the year resulting in a sizeable uplift in revenues and profits.  The breadth of appeal and excellent value for money of our offerings continued to encourage more customers to visit our restaurants including a significant increase in the sale of breakfasts, an area of potential growth that we have been focusing on.  We opened five new restaurants during the first half and have opened a further two restaurants since the half year.  Our new openings are trading well and are set to deliver strong returns.  During 2013 we expect to open between 15 and 19 new Frankie & Benny's restaurants.

Chiquito (69 units)

Chiquito traded strongly during the first half with significant increases in margins and profits.  Like-for-like sales were well ahead of the previous year and our focus on food quality, authenticity and service has yielded good results.  We have noticed a steady increase in awareness and popularity of Mexican food and this is particularly apparent from the levels of digital media interaction.  Digital media communication with existing (and potential) customers has been a key area of focus throughout our Group and we believe is an important tool for engaging with our customers; a theme that is also very apparent with our Coast to Coast brand.  We recently opened a new Chiquito restaurant at Glasgow Fort and we expect to open a total of three to four new Chiquito restaurants during 2013.

Coast to Coast (6 units)

Coast to Coast has performed superbly, building on a strong performance in 2012, with sales and profits increasing significantly.  We opened a new Coast to Coast restaurant at Highcross, Leicester, in June and expect to open a further four or five new Coast to Coast restaurants during 2013.  The performance of our Coast to Coast openings has been excellent; they are set to deliver strong returns, confirming our view that this new, third, Leisure brand has significant roll out potential.

Pub restaurants (46 units)

Our Pub restaurant business has delivered an excellent performance during the first half of the year.  Turnover, margins and profits rose significantly.  Having concluded the conversion of the ex-Blubeckers estate we are confident that the Pub restaurant model that we now have in place is set to deliver good growth.  During the first half we opened the Bull's Head at Mottram in Cheshire, it is trading significantly ahead of expectations and we are delighted that it has just been named as The Good Pub Guide's Best New Pub of the Year.  We expect to open a further two or three new Pub restaurants during the second half.

Garfunkel's (16 units)

Garfunkel's has traded well during the first half delivering a substantial increase in turnover and significantly higher margins and profits.  Although currently we do not have any new Garfunkel's planned for the second half, we continue to seek out opportunities for new restaurants and will pursue these where we are confident that they will at least meet our targeted returns on investment.

Concessions (59 units)

Our Concessions business traded well during the first half with sales, margins and profits all ahead of the previous year.  UK passenger numbers ("pax") were 2.1% higher than the prior year and it is encouraging to see our Concession business, again, outperform pax. We opened a new Frankie & Benny's restaurant at East Midlands Airport in July which is trading well, and is set to deliver strong returns. We expect to open a total of three to four new Concession restaurants in 2013.

Cash flow and balance sheet

Cash generation was strong in the first half with net cash flow from operations of £47.1m (2012: £38.5m) and free cash flow (after interest, tax and maintenance capital expenditure) of £27.9m, an increase of 30% on the comparable period last year. This again demonstrates the very strong cash flow generation characteristics of the Group and the high conversion rate of profit into cash flow.

During the first half total capital expenditure was £27.3m (2012: £24.7m). Of this, £10.3m represented maintenance capital expenditure with the balance of £17.0m being investment in new developments, including the acquisition of a number of freehold sites which we expect to open in the second half of the year. In the full year we anticipate opening 30 to 35 new sites. Including maintenance capital expenditure of £18-20m, this will result in full year total capital expenditure in the range of £55-60m.

We continue to maintain a prudent approach on capital structure and leverage. This approach has served the Group well in recent years and has enabled the business to focus on developing new sites generating excellent returns. For the time being we intend to continue with this approach.

Risks and uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and which could cause actual results to differ materially from expected and historical results. These have not materially changed from those set out on pages 19 to 21 of our latest annual report and accounts.

Outlook

The results for the first half are strong and, again, reflect an outperformance against our sector.  TRG benefits from operating in market segments with barriers to entry which have proved to be resilient and are growing. We have a strong portfolio of complementary brands with significant future roll out potential, our best ever pipeline of new sites stretching into 2015 and beyond and an outstanding team.

The second half has started well; year to date total turnover is up 10.5%, like-for-like sales are up 4.25% and I am confident that the Group is well placed to deliver another year of good progress.

Alan Jackson

Non-executive Chairman

30 August 2013

Notes to the Chairman's statement

1.   The latest Annual Report and Accounts for The Restaurant Group plc can be found on the Group website.

2.   Summary Income Statement:

	26 weeks to 30 June 2013	26 weeks to 1 July 2012	%
	£m	£m	change
Revenue	280.4	251.6	11.4%
Cost of sales	(231.3)	(209.4)
Pre-opening costs	(1.0)	(0.8)
Gross profit	48.1	41.4	16.1%
Administration costs	(15.0)	(13.2)
Share-based payments	(2.0)	(0.9)
EBITDA	46.9	41.7	12.6%
Depreciation	(15.8)	(14.4)
Operating profit	31.1	27.3	14.2%
Operating margin	11.1%	10.8%
Net interest	(1.1)	(1.2)
Profit before tax	30.0	26.1	15.2%
Tax	(7.6)	(6.8)
Profit after tax	22.4	19.3	15.9%
EPS (pence)	11.16	9.63	15.9%

3.   Summary Cash Flow:

				26 weeks to 30 June 2013			26 weeks to 1 July 2012
				£m			£m
	Operating profit			31.1			27.3
	Working capital & non cash adjustments			0.2			(3.2)
	Depreciation			15.8			14.4
	Net cash flow from operations			47.1			38.5
	Net interest paid			(0.5)			(0.7)
	Tax paid			(8.4)			(7.8)
	Maintenance capital expenditure			(10.3)			(8.6)
	Free cash flow			27.9			21.4
	Development capital expenditure			(17.0)			(16.1)
	Normalised net cash flow			10.9			5.3
	Disposals			-			0.7
	Net cash flow from share issues			0.5			-
	Purchase of shares			(2.3)			(2.9)
	Financing costs offset against bank debt			(0.2)			0.1
	Change in net debt			8.9			3.2
	Net bank debt at start of period			(36.0)			(41.6)
	Net bank debt at end of period			(27.1)			(38.4)
The Restaurant Group plc Interim report 2013
Condensed financial statements
Consolidated income statement
			26 weeks ended 30 June 2013			26 weeks ended 1 July 2012		52 weeks ended 30 December 2012
			(unaudited)			(unaudited)		(audited)
		Note	£'000			£'000		£'000
Revenue			280,443			251,641		532,541
Cost of sales:
Excluding pre-opening costs			(231,305)			(209,380)		(435,276)
Pre-opening costs			(1,033)			(819)		(2,217)
			(232,338)			(210,199)		(437,493)
Gross profit			48,105			41,442		95,048
Administration costs			(14,967)			(13,229)		(26,380)
Share-based payments			(2,013)			(950)		(2,233)
Earnings before interest, tax, depreciation and amortisation:			46,881			41,639		95,540
Depreciation			(15,756)			(14,376)		(29,105)
Operating profit			31,125			27,263		66,435
Interest payable			(1,243)			(1,313)		(2,527)
Interest receivable			132			114		653
Profit on ordinary activities before tax			30,014			26,064		64,561
Tax on profit from ordinary activities		2	(7,654)			(6,778)		(16,334)
Profit for the period			22,360			19,286		48,227
Earnings per share (pence)
Basic		3	11.16			9.63		24.08
Diluted		3	11.14			9.62		24.05

Consolidated statement of changes in equity
	Share	Share	Other	Retained	Total
	capital	premium	reserves	earnings
	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2012	56,334	24,027	(7,737)	111,224	183,848
Profit for the period	-	-	-	22,360	22,360
Issue of new shares	89	412	-	-	501
Dividends	-	-	-	-	-
Share-based payments - credit to equity	-	-	2,013	-	2,013
Employee benefit trust - purchase of shares	-	-	(2,291)	-	(2,291)
Other reserve movements	-	-	(1,847)	-	(1,847)
Current tax on share-based payments taken directly to equity	-	-	-	888	888
Deferred tax on share-based payments taken directly to equity	-	-	-	66	66
Balance at 30 June 2013 (unaudited)	56,423	24,439	(9,862)	134,538	205,538
Balance at 2 January 2012	56,319	23,982	(7,115)	84,096	157,282
Profit for the period	-	-	-	19,286	19,286
Issue of new shares	2	7	-	-	9
Dividends	-	-	-	-	-
Share-based payments - credit to equity	-	-	950	-	950
Employee benefit trust - purchase of shares	-	-	(2,855)	-	(2,855)
Other reserve movements	-	-	-	-	-
Current tax on share-based payments taken directly to equity	-	-	-	1,328	1,328
Deferred tax on share-based payments taken directly to equity	-	-	-	(923)	(923)
Balance at 1 July 2012 (unaudited)	56,321	23,989	(9,020)	103,787	175,077
Balance at 2 January 2012	56,319	23,982	(7,115)	84,096	157,282
Profit for the year	-	-	-	48,227	48,227
Issue of new shares	15	45	-	-	60
Dividends	-	-	-	(21,682)	(21,682)
Share-based payments - credit to equity	-	-	2,233	-	2,233
Employee benefit trust - purchase of shares	-	-	(2,855)	-	(2,855)
Other reserve movements	-	-	-	-	-
Current tax on share-based payments taken directly to equity	-	-	-	1,354	1,354
Deferred tax on share-based payments taken directly to equity	-	-	-	(771)	(771)
Balance at 30 December 2012 (audited)	56,334	24,027	(7,737)	111,224	183,848

Consolidated balance sheet
			At 30 June 2013	At 1 July 2012	At 30 December 2012
			(unaudited)	(unaudited)	(audited)
			£'000	£'000	£'000
Non-current assets
Intangible assets			26,433	26,433	26,433
Property, plant and equipment			305,377	278,349	293,785
			331,810	304,782	320,218
Current assets
Stock			4,068	3,884	4,872
Trade and other receivables			4,957	5,771	6,476
Prepayments			13,074	13,837	15,940
Cash and cash equivalents			2,909	5,309	12,879
			25,008	28,801	40,167
Total assets			356,818	333,583	360,385
Current liabilities
Corporation tax liabilities			(7,502)	(6,323)	(9,173)
Trade and other payables			(89,363)	(80,691)	(93,845)
Other payables - finance lease obligations			(329)	(327)	(328)
Provisions			(1,864)	(3,118)	(2,089)
			(99,058)	(90,459)	(105,435)
Net current liabilities			(74,050)	(61,658)	(65,268)
Non-current liabilities
Long-term borrowings			(30,016)	(43,716)	(48,853)
Other payables - finance lease obligations			(2,865)	(2,825)	(2,844)
Deferred tax liabilities			(15,682)	(17,484)	(15,712)
Provisions			(3,659)	(4,022)	(3,693)
			(52,222)	(68,047)	(71,102)
Total liabilities			(151,280)	(158,506)	(176,537)
Net assets			205,538	175,077	183,848
Equity
Share capital			56,423	56,321	56,334
Share premium			24,439	23,989	24,027
Other reserves			(9,862)	(9,020)	(7,737)
Retained earnings			134,538	103,787	111,224
Total equity			205,538	175,077	183,848

Consolidated cash flow statement
		26 weeks ended 30 June 2013	26 weeks ended 1 July 2012	52 weeks ended 30 December 2012
		(unaudited)	(unaudited)	(audited)
	Note	£'000	£'000	£'000
Operating activities
Cash generated from operations	5	47,101	38,475	102,000
Interest received		132	114	653
Interest paid		(649)	(816)	(1,551)
Tax paid		(8,400)	(7,841)	(16,141)
Net cash flows from operating activities		38,184	29,932	84,961
Investing activities
Purchase of property, plant and equipment		(27,364)	(24,749)	(54,945)
Disposal of fixed assets		-	730	98
Net cash flows used in investing activities		(27,364)	(24,019)	(54,847)
Financing activities
Net proceeds from issue of ordinary share capital		501	9	60
Employee benefit trust - purchase of shares		(2,291)	(2,855)	(2,855)
Net repayments of loan draw downs	6	(19,000)	(8,000)	(3,000)
Dividends paid to shareholders		-	-	(21,682)
Net cash flows used in financing activities		(20,790)	(10,846)	(27,477)
Net (decrease) / increase in cash and cash equivalents		(9,970)	(4,933)	2,637
Cash and cash equivalents at the beginning of the period		12,879	10,242	10,242
Cash and cash equivalents at the end of the period		2,909	5,309	12,879

Responsibility Statement

We confirm that to the best of our knowledge:

(a)  the condensed set of financial statements has been prepared in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting';

(b)  the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first 26 weeks and description of principal risks and uncertainties for the remaining 26 weeks of the year); and

(c)   the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board,

Alan Jackson	Stephen Critoph ACA
Non-executive Chairman	Group Finance Director
30 August 2013	30 August 2013

Accounting policies
Basis of preparation
The annual financial statements of The Restaurant Group plc are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union.  The condensed set of financial statements included in this interim financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union.  The accounting policies and methods of computation used are consistent with those used in the Group's latest annual audited financial statements.
General information
The comparatives for the full year ended 30 December 2012 do not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  A copy of the statutory accounts for that year has been delivered to the Registrar of Companies.  The auditor's report on these accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Going concern
There continue to be significant economic uncertainties facing the United Kingdom and consumer-facing industries in particular.  Potential risk factors and uncertainties that could affect the business are discussed in the Chairman's statement.  The Group has a debt facility of £140m which matures in October 2016 and had net debt at 30 June 2013 of £27.1m.  Based on the Group's plans for the next 12 months and after making enquiries (including preparation of reasonable trading forecasts, consideration of current financing arrangements and current headroom for liquidity and covenant compliance), the Directors have a reasonable expectation that the Group has adequate resources to continue operations for the foreseeable future.  For this reason they continue to adopt the going concern basis in preparing the condensed financial statements.
Changes in accounting policies
The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.
Notes to the condensed financial statements
1 Segmental analysis
The Group trades in one business segment (that of operating restaurants) and one geographical segment (being the United Kingdom).
2 Tax
The tax charge has been calculated by reference to the expected effective current and deferred tax rates for the full financial year to 29 December 2013 applied against the profit before tax for the period ended 30 June 2013.  The full year effective tax charge on the underlying trading profit is estimated to be 25.5% (2012: 25.3%).
The Finance Act 2012 introduced a reduction in the main rate of corporation tax from 24% to 23% effective from 1 April 2013 and this rate has been used to calculate the deferred tax provisions at the balance sheet date.
Further rate reductions to 21% from April 2014 and 20% from April 2015 were substantively enacted on 2 July 2013.  As they had not been substantively enacted at the balance sheet date, in accordance with IAS 10, these rate reductions are not reflected in these financial statements as they represent a non-adjusting event occurring after the reporting period.  The rate reduction from 23% to 20% is estimated to reduce the UK deferred tax liability provided at 30 June 2013 by £2.0m, however the actual impact will be dependent on the Group's deferred tax liability at the time.

3 Earnings per share

	26 weeks ended 30 June 2013			26 weeks ended 1 July 2012			52 weeks ended 30 December 2012
	Earnings	Weighted average number of shares	Per-share amount	Earnings	Weighted average number of shares	Per-share amount	Earnings	Weighted average number of shares	Per-share amount
	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(audited)	(audited)	(audited)
	£'000	millions	pence	£'000	millions	pence	£'000	millions	pence
Basic earnings per share	22,360	200.4	11.16	19,286	200.3	9.63	48,227	200.3	24.08
Effect of dilutive options	-	0.4	(0.02)	-	0.1	(0.01)	-	0.2	(0.03)
Diluted earnings per share	22,360	200.8	11.14	19,286	200.4	9.62	48,227	200.5	24.05

4 Dividends

Following approval at the Annual General Meeting on 15 May 2013, the final dividend in respect of 2012 of 7.30p per share, totalling £14.5m, was paid to shareholders on 10 July 2013.

The Directors have declared an interim dividend of 5.25p per share which will be paid on 9 October 2013 to ordinary shareholders on the register at close of business on 13 September 2013.  In accordance with IAS 10, this will be recognised in the reserves of the Group in the second half of the year.

5 Reconciliation of profit before tax to cash generated from operations

	26 weeks ended 30 June 2013	26 weeks ended 1 July 2012	52 weeks ended 30 December 2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Profit before tax	30,014	26,064	64,561
Net finance charges	1,111	1,199	1,874
Share-based payments	2,013	950	2,233
Depreciation	15,756	14,376	29,105
Decrease / (increase) in stocks	804	41	(947)
Decrease in debtors	4,385	2,932	124
(Decrease) / increase in creditors	(6,982)	(7,087)	5,050
Cash generated from operations	47,101	38,475	102,000

6 Bank loans

The Group has a committed bank facility of £140m in place until October 2016.  During the 26 weeks ended 30 June 2013, the Group reduced its draw-down under this facility by £19.0m. 

7 Share capital

Share capital at 30 June 2013 amounted to £56.4m.  The number of shares allotted, called up and fully paid increased from 200,298,132 to 200,613,907 in the period following the exercise of share options by employees, amounting to 315,775 shares. 

8 Related party transactions

Living Ventures Restaurants Group Limited is a related party to The Restaurant Group plc though the Group's 38% holding.  A loan note of £10.4m is due from LV Finance, a subsidiary of Living Ventures Restaurants Group Limited, which attracts interest at the rate of LIBOR.  During the 26 weeks ended 30 June 2013, £0.1m of interest was receivable and recognised in the income statement (52 weeks ended 30 December 2012:  £0.2m accrued of which the Group recognised £0.2m.  In addition a further £0.4m was received as part payment of the accrued interest, all of which was recognised in the income statement).  Consequently in addition to the loan note of £10.4m, at 30 June 2013 £0.1m of interest receivable was still outstanding, of which, under the terms of the agreement, all was overdue. 

Alan Jackson retired as a non-executive director of Charles Wells Limited in January 2012.  There were no significant changes in the nature and size of related party transactions with Charles Wells Limited for the period to those reported in the Annual Report and Accounts for the 52 weeks ended 30 December 2012.

9 Contingent liabilities

There were no significant changes in the nature and size of contingent liabilities at 30 June 2013 to those reported in the Annual Report and Accounts for the 52 weeks ended 30 December 2012.

INDEPENDENT REVIEW REPORT TO THE RESTAURANT GROUP PLC

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 30 June 2013 which comprises the consolidated income statement, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 9. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors.  The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in the accounting policies, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, UK

30 August 2013

 

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