TIDMRTN
RNS Number : 2730J
Restaurant Group PLC
08 April 2020
The Restaurant Group plc
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION EU 596/2016. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT THE INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
Market Update
The Restaurant Group's ("TRG" or the "Group") key priority at
these unprecedented times continues to be the health and safety of
our employees, customers and business partners.
In light of the rapidly changing developments regarding
Covid-19, we have modelled a pessimistic scenario for the current
financial year. This takes account of management actions taken to
conserve cash, the benefit from the government announced
initiatives and updated financing arrangements with the Group's
lending group.
This scenario assumes that all our restaurants and pubs will
remain closed until the end of June. Furthermore, with the
Government indicating that social distancing measures will remain
in force post lockdown, we believe that there will be a slow
recovery in footfall during the rest of this financial year. We
therefore assume that we would be extremely disciplined in the
phased reopening of our restaurants through July to December 2020
and would expect to reopen around 400 of our 600 restaurants and
pubs across that period, potentially with some restrictions on
operations immediately following lockdown.
This scenario results in the following revenue assumptions:
- An overall decline in Group like-for-like sales of c. 45% in
FY2020 assumed to be down 60% in the first half and c. 30% in the
second half (with Q3 down 45% and Q4 down 10%), and
- An overall decline in Group total sales of c. 50% in FY2020
(assumed down 60% in the first half and c. 45% in the second half
(with Q3 down 60% and Q4 down 30%).
Since the market update provided on 18 March 2020 the Group has
completed the following cash preservation activities:
- capital expenditure has been reduced to no more than GBP30m for FY2020,
- costs have been reduced to a minimum and (excluding payroll
costs supported by the Government), ongoing cash expenditure is now
only c. GBP3m per four week period
- the Group has accessed the Government furlough scheme to
ensure the ongoing employment of over 20,000 employees and included
the business rates holiday for three quarters of 2020,
- the Food and Fuel and Chiquito statutory entities have been placed into administration, and
- the Group is working with landlords across all business areas
to ensure that no minimum guarantees are enforced within
Concessions, where rents are largely turnover based; and to ensure
that the rent roll for 2020 across our other businesses reflects
the slow and gradual return of trade following the lockdown
period.
As a result, the Group now estimates under this scenario that
Adjusted EBITDA for the financial year ending 27 December 2020 will
be between GBP45m and GBP55m with net debt in the region of GBP310m
to GBP320m. Importantly, in Q4, despite a continuing decline in
like-for-like sales, the Group estimates that between GBP35m to
GBP40m in Adjusted EBITDA will be generated given the significant
cost restructuring completed.
Under this scenario, we forecast a minimum of GBP60m of cash
liquidity throughout the remainder of the 2020 financial year. The
Group believes that in the event that all our restaurants and pubs
are shut down for a period in excess of that assumed in this
scenario, then the adverse impact on cash would be no more than
GBP5m for each further month of complete closure plus the cost of
furloughing employees.
As announced on 6 April 2020, we have secured an additional
GBP15m increase in Santander's super senior revolving credit
facility to Wagamama from GBP20m to GBP35m, which further improves
our liquidity. Additionally, after consultation with a number of
major shareholders on the rationale and the structure, we are
seeking to raise further equity through a Cash Box Placing of up to
approximately 19.9% of the Company's existing ordinary share
capital (the "Placing"). Based on our current scenario planning set
out above, we believe this additional equity would provide
sufficient liquidity to deal with the current challenging
environments and enable the Group to continue to operate, where
possible, through this extraordinary period whilst ensuring that it
is well positioned for the eventual normalisation.
The Board of Directors has concluded the Placing is in the best
interests of shareholders and wider stakeholders and will promote
the success of the Company. This conclusion has been endorsed by
shareholder consultation. The Placing structure minimises cost and
time to completion at an important and unprecedented time for the
Company.
Clearly the situation continues to evolve rapidly and there is
no certainty around the severity and duration of the impact on the
business. However, the Restaurant Group is fundamentally a
resilient business with a strong asset base, substantial cash
liquidity and strong cash flow.
The Board remains confident in the strategy over the longer term
and believes the Group will be well positioned to benefit from the
normalisation in trade with its diversified set of brands.
Enquiries:
The Restaurant Group plc
Andy Hornby, Chief Executive
Officer
Kirk Davis, Chief Financial
Officer 0203 117 5001
MHP Communications (Financial
PR adviser)
Oliver Hughes / Simon Hockridge 07885 224 532 / 07709 496 125
About The Restaurant Group plc
1. The Restaurant Group plc operates over 600 restaurants and
pub restaurants throughout the UK. Its principal trading brands are
Frankie & Benny's, Wagamama and Brunning & Price. It also
operates a multi-brand Concessions business which trades
principally in UK airports. In addition the Wagamama business has 6
restaurants in the US under a Joint Venture (JV) partnership and
over 50 franchise restaurants operating across a number of
territories.
2. This statement is based on information sourced from management accounts.
A variety of factors may cause TRG's actual results to differ
materially from the forward-looking statements contained in this
announcement. This announcement may include statements that are, or
may be deemed to be, "forward-looking statements". These
forward-looking statements may be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "plans", "projects", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their
negative or other variations or comparable terminology, or by
discussions of strategy, plans, objectives, goals, future events or
intentions. Forward-looking statements may and often do differ
materially from actual results. Any forward-looking statements
reflect TRG's current view with respect to future events and are
subject to risks relating to future events and other risks,
uncertainties and assumptions relating to TRG's business, results
of operations, financial position, liquidity, prospects, growth and
strategies. Forward-looking statements speak only as of the date
they are made. By their nature, forward-looking statements involve
risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future or are beyond
TRG's control. TRG's actual operating results and financial
condition and the development of the industry in which it operates
may differ materially from the impression created by the
forward-looking statements contained in this announcement. In
addition, even if the operating results and financial condition of
TRG, and the development of the industry in which it operates, are
consistent with the forward-looking statements contained in this
announcement, those results or developments may not be indicative
of results or developments in subsequent periods. Important factors
that could cause these differences include, but are not limited to,
general economic and business conditions, industry trends,
competition, changes in government and other regulation, including
in relation to the environment, health and safety and taxation,
labour relations and work stoppages, changes in political and
economic stability and changes in business strategy or development
plans and other risks.
In particular, except for TRG's estimates in respect of Adjusted
EBITDA for the financial year ended 27 December 2020 and Adjusted
EBITDA in Q4 of that year, no statement in this announcement is
intended to be a profit forecast and no statement (including such
estimates of Adjusted EBITDA) should be interpreted to mean that
earnings per share of TRG for the current or future financial years
would necessarily match or exceed the historical published earnings
per share of TRG. The estimates of Adjusted EBITDA have been
prepared based on numerous assumptions and forecasts, including
those set out in this announcement, some of which are outside of
TRG's influence and/or control, and is therefore inherently
uncertain and there can be no guarantee or assurance that it will
be correct. The estimates of Adjusted EBITDA have not been audited,
reviewed, verified or subject to any procedures by our auditors and
you should not place undue reliance on it and there can be no
guarantee or assurance that it will be correct.
The persons responsible for arranging the release of this
announcement on behalf of TRG is Kirk Davis, the Chief Financial
Officer of TRG.
The LEI for TRG is 213800V4LJ2FXMQKKA46.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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