Interim Results

RNS Number : 1528Y

Restaurant Group PLC

28 August 2009

 



The Restaurant Group plc

Interim results for the 26 weeks ending 28 June 2009

The Restaurant Group plc operates 358 restaurants and pub restaurants predominantly in leisure locations and airports. Its primary offerings are Frankie and Benny's (182 sites), Chiquito (60), Brunning & Price (15), Blubeckers (29) and Garfunkel's (21).

·      The Group had a resilient performance in the first half of 2009:

 

o Revenue increased 3% to £210m (like-for-like -3%)

o Adjusted EBITDA increased by 3% to £36.3m (2008: £35.3m)

o Adjusted profit before tax increased by 3% to £21.7m (2008: £21.1m)

o Adjusted EPS rose 4% to 7.49p (2008: 7.20p)

o Interim dividend maintained at 1.4p per share

o Statutory profit before tax decreased by 9% to £20.1m (2008: £22.1m)

o Statutory EPS increased by 14% to 8.68p (2008: 7.60p)

*Results marked as adjusted are stated excluding non-trading items (refer to note 2)

·      Performance demonstrates the resilience of TRG’s business and strength of its brands

 

·      Operations strongly cash generative; net debt reduced by £10m since year end to £69m 

·      Continuing new site development

                                   o Eight new sites opened in the period

         o 15-20 new sites targeted for 2009

 

·      Resilient current trading with year to date like-for-like sales for the 34 weeks to 23 August 2009, -3.5% against strong comparatives

 

·      Board is confident of another year of progress in 2009

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

'These are good results, with sales, profits and earnings per share all increasing. Our strategic market positioning combined with a clear focus on value, margins, service and hospitality has enabled the Group to make further profitable progress during 2009, despite the severe economic downturn.

In addition to delivering these strong results, our team has also successfully opened twelve new restaurants so far this year and they are all performing well. Although conditions remain tough, going forward we will be looking to maintain our profitable progress.'

28 August 2009

Enquiries:

The Restaurant Group plc
Andrew Page, Chief Executive	020 7457 2020 (today)
Stephen Critoph, Group Finance Director	0845 612 5001 (thereafter)
College Hill
Matthew Smallwood	020 7457 2020

Chairman's statement

During the first six months of 2009 we have experienced the toughest trading conditions for several decades. A global economic downturn, tight credit markets, high levels of household debt and rising unemployment have combined to produce a very difficult backdrop for consumer-facing businesses and this has presented the hospitality sector with many challenges. 

Notwithstanding those challenges, I am delighted to report that The Restaurant Group plc ('TRG' or 'the Group') has been able to adapt well to these tougher conditions to produce another record set of interim results. TRG's brands offer customers excellent value for money and our primary focus has been, and continues to be, directed towards delivering high standards of service and hospitality; we have continued to eschew the deep discounting that has been prevalent elsewhere in our market place. This focus has enabled TRG to deliver increases in revenue, profits and earnings per share. This represents an excellent performance and serves to demonstrate the strength, balance and resilience of TRG's business. 

Adjusted profit before tax grew by 2.7% during the first six months of 2009 and, again, those increased profits have been converted into cash at a very healthy rate. The Group's net debt fell by £10m to £69m (28 December 2008: £79m). 

During the first six months we opened eight new restaurants and I am pleased to report that all are trading well. Although the UK property sector has been particularly quiet over the past six to nine months, with developers postponing and cancelling many projects, the Group is well on target to open 15-20 new restaurants this year. 

Results*

*Results marked as adjusted are stated excluding non-trading items (refer to note 2)

During the first half the Group delivered growth in revenues which increased by 3.4% to £210.2m (2008: £203.2m). EBITDA increased by 2.9% to £36.3m (2008: £35.3m), adjusted operating profit declined by 1% to £23.6m (2008: £23.9m) and adjusted earnings per share increased by 4.1% to 7.49p (2008: 7.20p). The Board is declaring an interim dividend of 1.40p per share (2008: 1.40p). This will be paid on 14 October 2009 to shareholders on the register on 18 September 2009 and the shares will be marked ex-dividend on 16 September 2009. 

Leisure (307 units)

Total revenue: £172.7m        Operating profit: £32.2m    Operating margin: 18.6%

Frankie & Benny's (182 units) 

Frankie & Benny's traded well during the first six months of the year and has grown both revenues and profits. Margins have held up very well as a result of good cost control and focusing on delivering great hospitality, value and service. Four new restaurants were opened during the first half - all are trading well and are set to deliver strong returns. We expect to open between four and eight further new Frankie & Benny's restaurants during the second half. 

Chiquito (60 units)

Chiquito traded solidly during the first six months of the year delivering a small increase in revenues. However, profits were a little below 2008 levels following a decrease in margins. This was primarily due to the introduction of a new lunchtime menu with pricing that was set at a very competitive level and also as a result of food input cost increases, which we did not pass on to customers. 

The restaurants which were opened during 2008 have all traded very strongly and are set to deliver strong returns. We expect to open between two and four new Chiquito's during the second half. 

Pub restaurants (44 units)

Following on from a very successful 2008, Brunning & Price has delivered an exceptionally strong performance with very significant increases in sales and profits. Meanwhile, our Blubeckers business traded solidly and, as described in the 2008 Annual Report, we have begun to align the Blubeckers pub restaurants more towards the less formal Brunning & Price style of operation. The first of these changes took place recently and the subsequent results have been outstanding. We anticipate a steady programme of refocusing several more of the Blubeckers pub restaurants over the next 12-18 months. 

Garfunkel's (21 units) 

Garfunkel's has performed superbly during the first six months of 2009. Most of our Garfunkel's restaurants operate from prominent central London locations and have enjoyed a strong and sustained trade during the first half of the year and this trend has continued into the second half. This has produced a significant increase in profits and represents an outstanding return on the capital employed in this brand. 

Since the first half ended we have opened a new Garfunkel's restaurant in Tottenham Court Road on a redeveloped site upon which we previously traded a very successful Garfunkel's and this is trading strongly. We are also currently considering a small number of other Central London opportunities for the Garfunkel's brand. 

Concessions (51 units) 

Total revenue: £37.5m        Operating profit: £5.1m        Operating margin: 13.5%

Our Concessions business has been impacted by double digit declines in airport passenger numbers ('pax') at many of the airports at which TRG trades during the first half of 2009. However, we have been able, to a meaningful degree, to mitigate the adverse impact of these significant falls in pax. This has been achieved through a combination of market share gains and tight cost control. As a result, we experienced a small reduction in turnover and a relatively modest reduction in margin and profit. 

Although we do not anticipate a rapid return to 2007/08 pax levels we are confident that the medium and long term outlook for TRG's Concessions business is good. We are the leading food and beverage operator in UK airports - the strength and depth of our team, and the returns which we consistently deliver for our airport partners, bode well for the future of this business. During the first half of 2009 we opened four new units at Aberdeen airport. These are all trading well and are set to deliver strong returns. We continue to seek out further opportunities to develop new restaurants in our Concessions division. 

Cash flow and balance sheet

The Group continues to be highly cash generative with over £30m of operating cash flow produced in the first six months of 2009 and net debt reduced by £10m to £69m. The Group continues to convert its increasing profits into cash at a very healthy rate and this reflects the disciplined manner in which we run the business. 

During the first half of 2009, capital additions were £15.9m (2008: £21.1m) of which £5.5m (2008: £5.2m) represented maintenance capital expenditure and £10.4m (2008: £15.9m) represented investment in opening new restaurants and freehold purchases. For the full year we expect to spend between £18m and £24m on new restaurants. 

Our net debt was £69m at the half year and we have a committed bank facility of £120m in place until December 2012. We continue to have substantial headroom against our banking facility covenants.

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 could cause actual results to differ materially from expected and historical results. These have not materially changed from the information on the principal risks and uncertainties of the Group which are set out on page 19 of our latest Annual Report and Accounts(1). The key risks and uncertainties facing the Group in the second half of the year include adverse economic conditions, increased competitive supply, the risk of a flu pandemic affecting customers, suppliers and staff in the Group and increased raw material and other costs.

Outlook

In the face of extremely difficult market conditions, the Group has traded well for the first six months of 2009 and, against tougher comparatives for the first eight weeks of the second half of the year, this pattern of trade has continued.  

Our total revenues are currently running 3% ahead of 2008 with like-for-like sales 3.5% below last year.  Although we expect conditions to remain tough in our sector, at least for the remainder of the year, we are very encouraged by the consistency and resilience of TRG's business, and the commitment, professionalism and dedication of our senior management team and staff. I am confident that this will enable the Group to continue its further profitable progress.  

Alan Jackson

Non-executive Chairman

28 August 2009

(1) The latest Annual Report and Accounts for The Restaurant Group plc can be found at www.trgplc.com.

The Restaurant Group plc
Condensed financial statements 2009
Consolidated income statement
		Six months ended 28 June 2009				Six months ended 29 June 2008				Year ended 28 December 2008
		(unaudited)				(unaudited)				(audited)
		Trading	Non-			Trading	Non-			Trading	Non-
		business	trading	Total		business	trading	Total		business	trading	Total
	Note	£'000	£'000	£'000		£'000	£'000	£'000		£'000	£'000	£'000
Revenue		210,153	-	210,153		203,197	-	203,197		416,530	-	416,530
Cost of sales:
Excluding pre-opening costs	3	(173,798)	(467)	(174,265)		(165,817)	-	(165,817)		(335,731)	-	(335,731)
Pre-opening costs		(514)	-	(514)		(899)	-	(899)		(2,513)	-	(2,513)
		(174,312)	(467)	(174,779)		(166,716)	-	(166,716)		(338,244)	-	(338,244)
Gross profit		35,841	(467)	35,374		36,481	-	36,481		78,286	-	78,286
Administration costs	3	(12,254)	(70)	(12,324)		(12,599)	-	(12,599)		(24,055)	-	(24,055)
Trading profit		23,587	(537)	23,050		23,882	-	23,882		54,231	-	54,231
Release of provision against carrying value of associate		-	-	-		-	39	39		-	39	39
Termination costs	3	-	-	-		-	-	-		-	(637)	(637)
Profit, net of losses, on disposal of fixed assets	3	-	-	-		-	305	305		-	292	292
Operating profit / (loss)		23,587	(537)	23,050		23,882	344	24,226		54,231	(306)	53,925
Interest payable		(2,011)	(1,024)	(3,035)		(2,802)	-	(2,802)		(5,403)	(1,488)	(6,891)
Interest receivable		125	-	125		55	638	693		97	-	97
Profit / (loss) on ordinary activities before tax		21,701	(1,561)	20,140		21,135	982	22,117		48,925	(1,794)	47,131
Tax on profit / (loss) from ordinary activities	4	(6,944)	3,901	(3,043)		(6,985)	(179)	(7,164)		(16,147)	1,233	(14,914)
Profit / (loss) for the period		14,757	2,340	17,097		14,150	803	14,953		32,778	(561)	32,217
Earnings per share (pence)
Basic	5	7.49		8.68		7.20		7.60		16.67		16.38
Diluted	5	7.39		8.56		7.17		7.57		16.43		16.15
Dividend per share (pence) 1	6			1.40				1.40				7.70
1 The dividend per share of 1.40p (2008: 1.40p) is the interim dividend in respect of 2009 and the dividend per share of 7.70p is the interim and final dividend in respect of 2008.

The Restaurant Group plc
Condensed financial statements 2009
Consolidated statement of comprehensive income
		Six months ended 28 June 2009	Six months ended 29 June 2008	Year ended 28 December 2008
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Profit for the period		17,097	14,953	32,217
Exchange differences on translation of foreign operations		(198)	165	512
Total comprehensive income for the period		16,899	15,118	32,729

The Restaurant Group plc
Condensed financial statements 2009
Consolidated statement of changes in equity
				Foreign
		Share	Share	currency translation	Other	Retained
		capital	premium	reserve	reserves	earnings	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Balance at 29 December 2008		55,333	21,104	633	(5,348)	21,884	93,606
Profit for the period		-	-	-	-	17,097	17,097
Exchange differences on translation of foreign operations		-	-	(198)	-	-	(198)
Total comprehensive income for the period		-	-	(198)	-	17,097	16,899
Issue of new shares		152	481	-	-	-	633
Dividends		-	-	-	-	(12,188)	(12,188)
Share-based payments - credit to equity		-	-	-	946	-	946
Employee benefit trust - purchase of shares		-	-	-	-	-	-
Current tax on share-based payments taken directly to equity		-	-	-	-	13	13
Deferred tax on share-based payments taken directly to equity		-	-	-	-	258	258
Balance at 28 June 2009 (unaudited)		55,485	21,585	435	(4,402)	27,064	100,167
Balance at 31 December 2007		55,295	21,004	121	(3,648)	4,382	77,154
Profit for the period		-	-	-	-	14,953	14,953
Exchange differences on translation of foreign operations		-	-	165	-	-	165
Total comprehensive income for the period		-	-	165	-	14,953	15,118
Issue of new shares		15	26	-	-	-	41
Dividends		-	-	-	-	(11,504)	(11,504)
Share-based payments - credit to equity		-	-	-	1,080	-	1,080
Employee benefit trust - purchase of shares		-	-	-	(3,597)	-	(3,597)
Current tax on share-based payments taken directly to equity		-	-	-	-	7	7
Deferred tax on share-based payments taken directly to equity		-	-	-	-	(461)	(461)
Balance at 29 June 2008 (unaudited)		55,310	21,030	286	(6,165)	7,377	77,838
Balance at 31 December 2007		55,295	21,004	121	(3,648)	4,382	77,154
Profit for the period		-	-	-	-	32,217	32,217
Exchange differences on translation of foreign operations		-	-	512	-	-	512
Total comprehensive income for the period		-	-	512	-	32,217	32,729
Issue of new shares		38	100	-	-	-	138
Dividends		-	-	-	-	(14,187)	(14,187)
Share-based payments - credit to equity		-	-	-	1,897	-	1,897
Employee benefit trust - purchase of shares		-	-	-	(3,597)	-	(3,597)
Current tax on share-based payments taken directly to equity		-	-	-	-	8	8
Deferred tax on share-based payments taken directly to equity		-	-	-	-	(536)	(536)
Balance at 28 December 2008 (audited)		55,333	21,104	633	(5,348)	21,884	93,606

The Restaurant Group plc
Condensed financial statements 2009
Consolidated balance sheet
		At 28 June 2009	At 29 June 2008	At 28 December 2008
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Non-current assets
Intangible assets		26,241	26,241	26,241
Property, plant and equipment		252,815	236,783	250,722
		279,056	263,024	276,963
Current assets
Stock		3,203	3,107	3,933
Financial assets - derivative financial instruments		-	1,053	-
Trade and other receivables		4,938	5,089	5,652
Prepayments		19,830	17,849	12,985
Cash and cash equivalents		1,515	1,366	5,470
		29,486	28,464	28,040
Total assets		308,542	291,488	305,003
Current liabilities
Short-term borrowings		(145)	(913)	-
Corporation tax liabilities		(7,808)	(7,368)	(7,749)
Trade and other payables		(97,475)	(99,426)	(84,211)
Financial liabilities - derivative financial instruments		(2,097)	-	(1,073)
Other payables - finance lease obligations		(275)	(272)	(274)
Provisions		(912)	(662)	(825)
		(108,712)	(108,641)	(94,132)
Net current liabilities		(79,226)	(80,177)	(66,092)
Non-current liabilities
Long-term borrowings		(70,427)	(71,777)	(84,354)
Other payables - finance lease obligations		(2,685)	(2,602)	(2,652)
Deferred tax liabilities		(22,843)	(26,063)	(26,211)
Provisions		(3,708)	(4,567)	(4,048)
		(99,663)	(105,009)	(117,265)
Total liabilities		(208,375)	(213,650)	(211,397)
Net assets		100,167	77,838	93,606
Equity
Share capital		55,485	55,310	55,333
Share premium		21,585	21,030	21,104
Foreign currency translation reserve		435	286	633
Other reserves		(4,402)	(6,165)	(5,348)
Retained earnings		27,064	7,377	21,884
Total equity		100,167	77,838	93,606

The Restaurant Group plc
Condensed financial statements 2009
Consolidated cash flow statement
		Six months ended 28 June 2009	Six months ended 29 June 2008	Year ended 28 December 2008
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	7	31,878	35,612	78,764
Interest received		125	55	97
Interest paid		(1,068)	(1,143)	(4,858)
Tax paid		(6,081)	(6,329)	(13,624)
Net cash flows from operating activities		24,854	28,195	60,379
Cash flows from investing activities
Net proceeds on disposal of investment in associate		-	39	39
Purchase of property, plant and equipment		(15,873)	(21,159)	(46,723)
Proceeds from sale of property, plant and equipment		286	1,742	1,729
Net cash flows used in investing activities		(15,587)	(19,378)	(44,955)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		633	41	138
Employee benefit trust - purchase of shares		-	(3,597)	(3,597)
Net (repayments of) / proceeds from issue of bank loans	8	(14,000)	(6,500)	6,000
Dividends paid to shareholders		-	-	(14,187)
Net cash flows used in financing activities		(13,367)	(10,056)	(11,646)
Net (decrease) / increase in cash and cash equivalents		(4,100)	(1,239)	3,778
Cash and cash equivalents at beginning of period		5,470	1,692	1,692
Cash and cash equivalents at end of period		1,370	453	5,470

The Restaurant Group plc
Condensed financial statements 2009
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 six months and description of principal risks and uncertainties for the remaining six months 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
28 August 2009	28 August 2009
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 method of computation used are consistent with those used in the Group's latest annual audited financial statements, except for as described below.
General information
The comparatives for the full year ended 28 December 2008 do not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year have been delivered to the Registrar of Companies. The auditors 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 237(2) or (3) of the Companies Act 1985.
Going concern
As referred to in the Chairman's statement, there are significant economic uncertainties facing the United Kingdom and consumer-facing industries in particular. Potential risk factors and uncertainties that could affect the business are also discussed in the Chairman's statement. The Group has a debt facility of £120m which matures in December 2012 and had net debt at 28 June 2009 of £69m. 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
In the current financial year, the Group has adopted IFRS 8 'Operating Segments' and IAS 1 'Presentation of Financial Statements' (revised 2007). IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly viewed by the Chief Executive to allocate resources to the segments and assess their performance. Following consideration of the operating segments of the Group, two segments, Leisure and Concessions, have been identified. Both segments derive revenue from the operation of restaurants and pub restaurants but are distinguishable on the basis of a combination of factors including location, customers, allocation of resources, management reporting and new site identification. There has been no change in segments following the adoption of IFRS 8 and there has been no material change to the allocation of assets between the operating segments since the year end. IAS 1 (revised) requires the presentation of a statement of changes in equity as a primary statement, separate from the income statement, and a statement of comprehensive income. As a result, the condensed set of financial statements now includes a consolidated statement of comprehensive income and a consolidated statement of changes in equity showing changes in each component of equity for each period presented.

The Restaurant Group plc
Condensed financial statements 2009
Notes to the condensed financial statements
1 Segmental analysis
	Six months ended 28 June 2009						Six months ended 29 June 2008
					Operating						Operating
			EBITDA	Operating	profit				EBITDA	Operating	profit
	Turnover	EBITDA	margin	profit	margin		Turnover	EBITDA	margin	profit	margin
	£'000	£'000	%	£'000	%		£'000	£'000	%	£'000	%
Leisure	172,681	42,268	24.5%	32,199	18.6%		161,279	40,925	25.4%	32,078	19.9%
Concessions	37,465	7,367	19.7%	5,072	13.5%		41,789	8,008	19.2%	6,029	14.4%
Principal trading brands	210,146	49,635	23.6%	37,271	17.7%		203,068	48,933	24.1%	38,107	18.8%
Non-core brands	7	(815)	-	(916)	-		129	(502)	(388.4%)	(727)	(562.3%)
Total all brands	210,153	48,820	23.2%	36,355	17.3%		203,197	48,431	23.8%	37,380	18.4%
Pre-opening costs		(514)	(0.2%)	(514)	(0.2%)			(899)	(0.4%)	(899)	(0.4%)
Administration costs		(11,054)	(5.3%)	(11,308)	(5.4%)			(11,170)	(5.5%)	(11,519)	(5.7%)
Share-based payments		(946)	(0.4%)	(946)	(0.4%)			(1,080)	(0.5%)	(1,080)	(0.5%)
Total before non-trading items		36,306	17.3%	23,587	11.2%			35,282	17.4%	23,882	11.8%
Write downs and associated costs for sites exited post period end				(537)						-
Release of provision against carrying value of associate				-						39
Termination costs				-						-
Profit, net of losses, on disposal of fixed assets				-						305
Operating profit				23,050						24,226
Total net interest charges				(2,910)						(2,109)
Profit on ordinary activities before tax				20,140						22,117
EBITDA is operating profit before depreciation, amortisation and non-trading items.

The Restaurant Group plc
Condensed financial statements 2009
Notes to the condensed financial statements
1 Segmental analysis
	Year ended 28 December 2008
					Operating
			EBITDA	Operating	profit
	Turnover	EBITDA	margin	profit	margin
	£'000	£'000	%	£'000	%
Leisure	328,986	87,147	26.5%	68,951	21.0%
Concessions	87,275	16,606	19.0%	12,735	14.6%
Principal trading brands	416,261	103,753	24.9%	81,686	19.6%
Non-core brands	269	(290)	(107.9%)	(887)	(330.2%)
Total all brands	416,530	103,463	24.8%	80,799	19.4%
Pre-opening costs		(2,513)	(0.6%)	(2,513)	(0.6%)
Administration costs		(21,557)	(5.2%)	(22,158)	(5.3%)
Share-based payments		(1,897)	(0.5%)	(1,897)	(0.5%)
Total before non-trading items		77,496	18.6%	54,231	13.0%
Write downs and associated costs for sites exited post period end				-
Release of provision against carrying value of associate				39
Termination costs				(637)
Profit, net of losses, on disposal of fixed assets				292
Operating profit				53,925
Total net interest charges				(6,794)
Profit on ordinary activities before tax				47,131
EBITDA is operating profit before depreciation, amortisation and non-trading items.

The Restaurant Group plc

Condensed financial statements 2009

Notes to the condensed financial statements

2 Additional non-statutory information

Additional non-statutory income statement information is provided as a useful guide to underlying trading performance. The 2009 and 2008 interim results and the 2008 full year results include a number of items which are of a one-off nature or are unrelated to the period's result and hence are not representative of the underlying trading performance of the business. The following segmental analysis excludes these non-trading items, as described in note 3, and is provided to aid understanding of the income statement and should be read in conjunction with, rather than as a substitute for, the reported information.

The Restaurant Group plc
Condensed financial statements 2009
Notes to the condensed financial statements
2 Additional non-statutory information *
* Results are stated excluding non-trading items
	Six months ended 28 June 2009						Six months ended 29 June 2008
					Operating						Operating
			EBITDA	Operating	profit				EBITDA	Operating	profit
	Turnover	EBITDA	margin	profit	margin		Turnover	EBITDA	margin	profit	margin
	£'000	£'000	%	£'000	%		£'000	£'000	%	£'000	%
Leisure	172,681	42,268	24.5%	32,199	18.6%		161,279	40,925	25.4%	32,078	19.9%
Concessions	37,465	7,367	19.7%	5,072	13.5%		41,789	8,008	19.2%	6,029	14.4%
Principal trading brands	210,146	49,635	23.6%	37,271	17.7%		203,068	48,933	24.1%	38,107	18.8%
Non-core brands	7	(815)	-	(916)	-		129	(502)	(388.4%)	(727)	(562.3%)
Total all brands	210,153	48,820	23.2%	36,355	17.3%		203,197	48,431	23.8%	37,380	18.4%
Pre-opening costs		(514)	(0.2%)	(514)	(0.2%)			(899)	(0.4%)	(899)	(0.4%)
Administration costs		(11,054)	(5.3%)	(11,308)	(5.4%)			(11,170)	(5.5%)	(11,519)	(5.7%)
Share-based payments		(946)	(0.4%)	(946)	(0.4%)			(1,080)	(0.5%)	(1,080)	(0.5%)
EBITDA / adjusted operating profit		36,306	17.3%	23,587	11.2%			35,282	17.4%	23,882	11.8%
Total net interest charges				(1,886)						(2,747)
Adjusted profit before taxation				21,701						21,135
Taxation				(6,944)						(6,985)
Adjusted profit after taxation				14,757						14,150
Earnings per share (pence) - trading business
Basic				7.49						7.20
Diluted				7.39						7.17
EBITDA is operating profit before depreciation, amortisation and non-trading items.

			Year ended 28 December 2008
								Operating
					EBITDA	Operating		profit
	Turnover			EBITDA	margin	profit		margin
	£'000			£'000	%	£'000		%
Leisure	328,986			87,147	26.5%	68,951		21.0%
Concessions	87,275			16,606	19.0%	12,735		14.6%
Principal trading brands	416,261			103,753	24.9%	81,686		19.6%
Non-core brands	269			(290)	(107.9%)	(887)		(330.2%)
Total all brands	416,530			103,463	24.8%	80,799		19.4%
Pre-opening costs				(2,513)	(0.6%)	(2,513)		(0.6%)
Administration costs				(21,557)	(5.2%)	(22,158)		(5.3%)
Share-based payments				(1,897)	(0.5%)	(1,897)		(0.5%)
EBITDA / adjusted operating profit				77,496	18.6%	54,231		13.0%
Total net interest charges						(5,306)
Adjusted profit before taxation						48,925
Taxation						(16,147)
Adjusted profit after taxation						32,778
Earnings per share (pence) - trading business
Basic						16.67
Diluted						16.43
EBITDA is operating profit before depreciation, amortisation and non-trading items.

3 Non-trading items
The Group has taken a charge of £1.0m in respect of the remeasurement of its interest rate swap (six months ended 29 June 2008: credit of £0.6m, 12 months ended 28 December 2008: £1.5m charge).
In the six months ended 28 June 2009, the Group recognised a charge of £0.6m in relation to write downs and associated costs for properties exited since the period end date. During the six months ended 28 June 2009, the Group recognised a £nil profit or loss on disposal of fixed assets (six months ended 29 June 2008: net profit of £0.3m, 12 months ended 28 December 2008: net profit of £0.3m).
In the year ended 28 December 2008 the Group incurred £0.6m of termination costs.
In the six months ended 28 June 2009, the Group has recognised a non-trading taxation credit of £3.9m. Included within this amount is a credit of £3.6m in relation to the release of provisions created in 2005 following agreement with HMRC on the treatment of a number of transactions.
4 Taxation
The taxation charge has been calculated by reference to the expected effective corporation and deferred tax rates for the full financial year to 3 January 2010 applied against the profit before tax for the period ended 28 June 2009. The full year effective tax charge on the underlying trading profit is estimated to be 32% (2008: 33%). The Finance Act 2007 reduced the rate of corporation tax from 30% to 28% from 1 April 2008 and this reduction has been reflected when calculating the tax charge.

5 Earnings per share
		Six months ended 28 June 2009
		Earnings		Weighted average number of shares	Per-share amount
		(unaudited)		(unaudited)	(unaudited)
		£'000		millions	pence
Basic earnings per share		17,097		197.0	8.68
Effect of dilutive options		-		2.7	(0.12)
Diluted earnings per share		17,097		199.7	8.56
Basic earnings per share		17,097		197.0	8.68
Effect of non-trading items		(2,340)		-	(1.19)
Earnings per share - trading business		14,757		197.0	7.49
		Six months ended 29 June 2008
		Earnings	Weighted average number of shares		Per-share amount
		(audited)	(audited)		(audited)
		£'000	millions		pence
Basic earnings per share		14,953	196.6		7.60
Effect of dilutive options		-	0.8		(0.03)
Diluted earnings per share		14,953	197.4		7.57
Basic earnings per share		14,953	196.6		7.60
Effect of non-trading items		(803)	-		(0.40)
Earnings per share - trading business		14,150	196.6		7.20

			Year ended 28 December 2008
			Earnings			Weighted average number of shares		Per-share amount
			(audited)			(audited)		(audited)
			£'000			millions		pence
Basic earnings per share			32,217			196.7		16.38
Effect of dilutive options			-			2.8		(0.23)
Diluted earnings per share			32,217			199.5		16.15
Basic earnings per share			32,217			196.7		16.38
Effect of non-trading items			561			-		0.29
Earnings per share - trading business			32,778			196.7		16.67
6 Dividends
Following approval at the Annual General Meeting on 6 May 2009, the proposed final dividend in respect of 2008 of 6.30p per share, totalling £12.2m, is to be recognised through the interim and final financial statements of 2009. This is in accordance with IAS 10 'Events after the Balance Sheet Date'. This dividend was paid to shareholders on 8 July 2009.
The Directors have declared an interim dividend of 1.40p per share, amounting to £2.8m, which will be paid on 14 October 2009 to ordinary shareholders on the register at close of business on 18 September 2009. In accordance with IAS 10, this will be recognised in the reserves of the Group in the second half of the year.
7 Reconciliation of profit before tax to net cash flow from operating activities
							Six months ended 28 June 2009			Six months ended 29 June 2008			Year ended 28 December 2008
							(unaudited)			(unaudited)			(audited)
							£'000			£'000			£'000
Profit before tax							20,140			22,117			47,131
Net finance charges							2,910			2,109			6,794
Write downs and associated costs for sites exited post period end							537			-			-
Profit, net of losses, on disposal of fixed assets							-			(305)			(292)
Release of provision against carrying value of associate							-			(39)			(39)
Share-based payment expense							946			1,080			1,897
Depreciation							12,719			11,400			23,265
Decrease / (increase) in stocks							730			242			(584)
(Increase) / decrease in debtors							(5,995)			(3,395)			915
(Decrease) / increase in creditors							(109)			2,403			(323)
Cash flows from operating activities							31,878			35,612			78,764
8 Bank loans
During the six months ended 28 June 2009, the Group repaid £14m of draw downs under the existing facility. As previously disclosed, the Group has a committed bank facility of £120m in place until December 2012.

9 Share capital
Share capital at 28 June 2009 amounted to £55.5m. The number of shares allotted, called up and fully paid increased from 196,738,838 to 197,281,159 in the period following the exercise of share options by employees, amounting to 542,321 shares.
10 Related party transactions
There were no significant changes in the nature and size of related party transactions for the period to those reported in the Annual Report and Accounts for the year ended 28 December 2008.
11 Contingent liabilities
There were no significant changes in the nature and size of contingent liabilities at 28 June 2009 to those reported in the Annual Report and Accounts for the year ended 28 December 2008.

 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 six months ended 28 June 2009 which comprises the consolidated income statement, the consolidated balance sheet, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 11. 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 them 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 six months ended 28 June 2009 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 Auditors

London, UK

28 August 2009

 

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