Full Year Results, 10 Mar 2021 07:00

10 March 2021, 07:00

Source - LSE Regulatory

RNS Number : 7242R

Restaurant Group PLC

10 March 2021

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF THE MARKET ABUSE REGULATION (REGULATION (EU) No 596/2014). UPON THE PUBLICATION OF THIS ANNOUNCEMENT THE INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

The Restaurant Group plc ("TRG" or "The Group")

Final results for the 52 weeks ended 27 December 2020

TRG: Restructured, Recapitalised and Ready for Relaunch

Summary

· Encouraging trading performance in all periods when permitted to trade

o Wagamama and Pubs businesses particularly strong

· Leisure and Concessions estate right-sized with the exit of approximately 250 sites through restructuring actions

· Long-term financing secured post year-end, with £500m of new debt facilities in place and a flexible covenant package

· As announced separately today, Capital raise of £175m to enhance liquidity, accelerate deleveraging and support selective growth

· Business well positioned for relaunch when restrictions eased

Current trading and outlook

· The short-term outlook is uncertain whilst restrictions are in place

· Average standalone delivery and takeaway sales in Wagamama and Leisure at c.2.5x and c.5.0x pre-Covid-19 levels respectively during the current national lockdown (for the four weeks ended 28 February 2021)

· The Group has strong capability to deliver an accelerated reopening plan, once the current restrictions for hospitality businesses end

· The Group is well positioned across its diversified brand portfolio to benefit from the sustained removal of restrictions over time and to deliver long-term shareholder value

Andy Hornby, Chief Executive Officer, commented:

"The Covid-19 pandemic has presented enormous challenges for our sector but the TRG team has responded decisively to re-structure our business whilst preserving the maximum number of long term roles for our colleagues. TRG is operationally a much stronger business than 12 months ago. I would like to sincerely thank each and every TRG colleague for their enormous efforts throughout this period.

The Capital raise announced today, alongside the debt re-financing announced last week, represents the last important step in our re-structuring process and provides TRG with the long term flexibility to invest in growing our business. Whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long term winners."

Enquiries:

The Restaurant Group plc

Andy Hornby, Chief Executive Officer

Kirk Davis, Chief Financial Officer

Umer Usman, Investor Relations

020 3117 5001

MHP Communications

Oliver Hughes

Simon Hockridge

07885 224532/07709 496125

Investor and analyst conference call facility

In conjunction with today's presentation to analysts, a live conference call and webcast facility will be available starting at 08:00am. If you would like to register, please contact Isabella Grace at MHP Communications for details on 020 3128 8841 or email TRG@mhpc.com.

The presentation slides will be available to download from 07:00am from the Company's website

https://www.trgplc.com/investors/capitalraising/

Notes:

1. As at 27 December 2020, The Restaurant Group plc operated approximately 400 restaurants and pub restaurants throughout the UK. Its principal trading brands are Wagamama, Frankie & Benny's and Brunning & Price. It also operates a multi-brand Concessions business which trades principally in UK airports. In addition the Wagamama business has a 20% stake in a JV operating six Wagamama restaurants in the US and over 50 franchise restaurants operating across a number of territories.

2. Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect the Group's current expectations concerning future events and actual results may differ materially from current expectations or historical results.

3. The Group's Adjusted performance metrics ('APMs') such as like-for-like sales, Adjusted measures, IAS 17 basis measures and free cash flow are defined within the glossary at the end of this report.

4. The person responsible for arranging the release of this announcement on behalf of TRG is Kirk Davis (CFO).

5. Any securities mentioned herein (the "Securities") have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or under the applicable securities laws of any state or other jurisdiction of the United States. The Securities may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in the United States absent registration under the Securities Act, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offering of the Securities in the United States. None of the Securities, this announcement or any other document connected with the capital raising has been or will be approved or disapproved by the U.S. Securities and Exchange Commission, any state securities commission in the United States, or any other U.S. regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Securities or the accuracy or adequacy of any of the documents or other information related thereto. Any representation to the contrary is a criminal offence in the United States.

Chairman's statement

2020 has been an extraordinarily difficult period for the hospitality industry, which has arguably been more affected by the repercussions of Covid-19 pandemic than almost any other sector. In spite of this, the Group's leadership acted with pace at the onset of this pandemic to protect the business and have rigorously and diligently executed a series of actions to ensure that we remain well positioned to rebuild trading momentum once restrictions are lifted in the medium-term and to leverage potential market opportunities in the long-term.

Our reported results reflect that we have been closed for 'dine-in' in many of our restaurants for a very significant proportion of 2020, including two periods of complete lockdown and selective lockdowns through the tiering policy, which saw many of our pubs and restaurants categorised as 'takeaway' or delivery only. Our Concessions business has, in the main, remained closed throughout the year.

As a result, total revenues in the year were down 57% to £459.8m. More positively, in the periods where we were allowed to trade for 'dine-in' (which also benefitted from the Eat Out to Help Out scheme and VAT reduction), Wagamama continued to deliver exceptional like-for-like ("LFL") sales growth, trading well ahead of its core UK market and ahead of management expectations. Throughout the year the business achieved substantial growth through delivery and 'click and collect' channels, attracting a number of customers new to delivery and to Wagamama. Similarly, our Pubs business continued to trade consistently ahead of the pub restaurant sector when open for 'dine-in', and our restructured Leisure business showed improved LFL sales growth when it was allowed to open, the first time it has shown growth for five years.

In spite of heroic efforts to reduce our operating costs during the year, (reduced to just c£3.5m per month during the first national lockdown), adjusted losses before tax were £87.5m (2019: profit of £74.5m). The adjusted Loss per Share (LPS) was 13.4p compared to an adjusted Earnings per Share (EPS) of 11.9p in 2019. Statutory loss before tax was £127.6m (2019 loss before tax of £37.3m) including exceptional charges of £40.1m (2019 £111.8m) relating primarily to the restructuring charges explained in detail in the Financial Review section. Statutory LPS was 21.3p (2019: LPS 8.2p). These results also reflect the first-time implementation of IFRS 16 'Leases' in the current year, but comparatives have not been restated. On an IAS 17 basis, Adjusted EBITDA was £8.7m (2019: £136.7m) and Adjusted loss before tax was £47.9m (2019: profit of £74.5m).

Our priority throughout this pandemic has been the safety of our colleagues and customers and the preservation of cash, with all non-essential spend avoided. With that as a backdrop, the team have taken a range of actions including contract negotiations with our supportive supplier base, agreement of deferred payment plans, a significant reduction in capital expenditure to £38.9m (2019: £73.3m), accessing Government support where appropriate and taking voluntary pay and fee reductions and bonus waivers.

To strengthen our liquidity, we carried out a placing of shares on 8 April 2020, which raised net proceeds of £54.6m from institutional shareholders. We also achieved flexibility in our banking facilities from our supportive lending group, adding an additional £25m to the Group's overall committed debt facilities, as well as extending the majority of facilities to 30 June 2022. Post year-end, the Group secured long-term committed financing to ensure the long term security of the business.

We have also significantly restructured our estate through several initiatives, with our total estate now c.400 sites, compared with 653 at the end of 2019. These initiatives included a CVA in the Leisure business, which resulted in the exit of 128 underperforming sites (primarily relating to the Frankie & Benny's brand); the administration of Chiquito Limited, resulting in the exit of 45 underperforming sites; the administration of Food & Fuel Limited, which resulted in the exiting of seven underperforming sites; and the exiting of over 30 economically unattractive Concessions sites.

During the year, Mike Tye and Allan Leighton stepped down from the Board as Non Executives. We'd like to thank them both for their contribution to the business. Graham Clemett became the Senior Independent Director and as previously announced, Alex Gersh joined the business as a Non-Executive on 23 February 2021. Alex is an experienced listed business CFO and was previously CFO of the FTSE 100 constituent, Paddy Power Betfair Group, where he played a key role in the merger of Betfair with Paddy Power plc and in driving the subsequent success of the combined business. He will become a member of both the Audit and Nominations Committees.

The Group now employs approximately 14,000 people and we sincerely thank each and every one of them for their extraordinary efforts during this most challenging year, along with other stakeholders who have continued to be supportive of the Group. The feedback from customers who have missed our brands has been uplifting for our teams and we appreciate their loyalty.

As we look forward, despite all of the challenges of the pandemic, the business is well positioned to deliver long-term shareholder value. We have differentiated brands, with the opportunity to grow our delivery penetration, whilst at the same time sector capacity has reduced materially.

The Board is encouraged by the welcome news of the initial success of the vaccination programme currently being rolled out, and is confident that the actions that we have taken provide us with strong foundations to emerge as one of the long-term winners once restrictions ease.

Debbie Hewitt MBE

Chairman

10 March 2021

Business review

Introduction

The Covid-19 pandemic and associated UK Government policy responses have had a very significant detrimental impact on the hospitality sector and on TRG's ability to trade normally, and as a consequence its financial results and short-term outlook. In response to the pandemic, the Group has taken decisive action to protect the future of the business. The key developments are set out below and fall into three main strands:

1) Restructured the business

2) Recapitalised the business

3) Ready for Relaunching the business

1. Restructured the business

Actions taken

The Group has significantly restructured its estate through several initiatives, for example, the CVA of TRG UK Ltd (primary operator of the Frankie & Benny's brand), and exiting of Concessions sites that are no longer economically viable, and achieving improved terms with the majority of its airport partners, including a waiver of rental payments for non-trading periods and temporary suspension of minimum guaranteed rents ("MGR's") or reduced MGR's linked to passenger volumes. This improved flexibility in the rental structure enables the Concessions business to partially mitigate medium-term passenger volatility on trading. Overall, lease liabilities (IFRS 16) have been reduced by c.48% to £484m (from £933m as at 30 December 2019).

Current estate

Following the restructuring actions described above, the business has been reshaped and the retained estate is as below:

	Year-end 2019	CVA	Administrations	Closed[1]	Openings	Year-end 2020[2]

Wagamama UK[3]	148	-	-	(5)	6	149
Pubs	84	-	(7)[4]	(1)	2	78
Leisure	350	(128)	(45)[5]	(40-45)	-	132-137
Concessions	71	-	-	(36-41)	-	30-35

Total	653	(128)	(52)	(82-92)	8	c.400

Diversified portfolio with four distinct pillars well positioned to deliver long-term shareholder value

The restructured Group is focused on addressing what it believes are attractive segments of the market and good locations, with increasing penetration of delivery and take-away components across the Wagamama and Leisure businesses. During the periods of re-opening in 2020, the Group's businesses' trading performance was in line with or exceeded that of their respective market benchmark, demonstrating their attractive positioning in the UK market. The Directors believe the four divisions of the Group are therefore well positioned across its diversified brand portfolio to benefit from a return to more normal levels of customer activity, as and when that occurs, and as a result deliver long-term Shareholder value:

· Wagamama (c. 38% of retained estate): Wagamama is the only UK pan-Asian brand concept of scale, with no large direct competitor, and benefits from being aligned to a number of consumer trends, including the focus on healthy options, speedy service and convenience through delivery. The Wagamama obsession with fresh food and superior levels of engagement amongst team members (with industry leading team turnover rate) are critical points of differentiation, with the cuisine also travelling extremely well for delivery and takeaway. The business has a five-year track record of consistent market LFL sales outperformance of over 5% pre-lockdown, and this continued during the period of reopening (according to the Coffer Peach tracker for restaurants). Delivery related sales penetration has also increased significantly, and the business is well positioned to win market share in the long-term structural growth trend towards delivery. Wagamama (excluding delivery kitchens) has a track record of delivering over 40% returns on invested capital and approximately £500,000 average outlet EBITDA (based on new openings between 2015 and 2017). The five Wagamama delivery kitchens currently in operation generate £225,000 average outlet EBITDA with over 75% return on invested capital. Given this track record, long-term ambitions include significant measured roll-out potential to expand both in the UK to a targeted c.180-200 restaurants (from 144 today), c.20-30 delivery kitchens (from five today), and in international markets via franchise and the US JV.

· Pubs (c. 20% of retained estate): The Pubs business benefits from their premium proposition, being situated in rural locations with outside space and limited competition nearby, as well as autonomy at a site level on menu selection which allows pubs to adapt rapidly to local trends. Approximately 50% of the Pubs estate has over 100 external covers, with the expansive buildings and grounds providing multiple ancillary trading opportunities. There is strong asset backing, with a freehold asset base valued at c. £153 m (as of 27 December 2020, according to a third-party valuation report commissioned by the Group). The Group's pubs have demonstrated excellent operational capabilities, with a well-established team and practices. TRG's pubs have a five year track record through to 2019 of consistently outperforming market LFL sales by an average of 4%. The Pubs business also has a strong track record of delivering returns on invested capital of over 25% (on an adjusted leasehold basis[6]) and approximately £450,000 average outlet EBITDA (based on new openings between 2015 and 2017). Long-term ambition is for further selective site expansion and growing the business from 78 pubs today to a target of c.140-160 pubs.

· Leisure (c. 33% of retained estate): The Leisure portfolio has been significantly restructured, leading to a c.60% reduction in the trading estate, through the exit of a large number of structurally unattractive leases, addressing a key prior weakness of the Group. Furthermore, the restructuring of the Leisure business has also seen improved rental structures, with the average lease maturity reduced from 6 to 2.3 years, and an increase in the number of sites with turnover based rental terms increasing from 13% to 66% (subject to minimum base rents). The Board believes that the resulting portfolio has the potential to achieve a higher average outlet EBITDA and EBITDA margin, with a significantly improved rental structure. The restructured estate represents c. 70% of the divisions FY 2019 outlet EBITDA. Delivery related sales penetration has also increased significantly, demonstrating that the business is well positioned to benefit from the macro trend towards delivery. The Group has recruited a new and experienced operational team to lead the long term recovery of the division and the long-term ambitions will focus on improving the cash generative nature of the division, maintaining the best sites in the strongest locations and increasing delivery penetration.

· Concessions (c. 9% of retained estate): The business has historically benefited from consistent UK passenger growth and traded ahead[7] of it. Given passenger volumes are significantly reduced at present and anticipated not to significantly improve until 2022, the Group has restructured its estate, with a projected 50% reduction in Concessions sites from 71 to between 30 to 35 sites compared to FY 2019. The restructured estate will principally comprise of sites located in the UK's major airports of Heathrow, Gatwick, Luton, Stansted and Manchester. The restructured estate will allow TRG to focus on delivering a higher average outlet EBITDA, as it represents c. 80% of FY 2019 outlet EBITDA. While there is not anticipated to be a significant improvement in airport passenger volumes in the immediate future, the Board believes that the resulting portfolio is well positioned to deliver attractive financial returns when air passenger growth returns to more normal levels of activity.

2. Recapitalised the business

£500m of new debt facilities

On 1 March 2021, the Group announced it had successfully signed commitments in relation to £500m of new debt facilities (the "New Facilities"), which comprise a £380m Term Loan Facility (the "Term Loan"), and a £120m Super Senior Revolving Credit Facility (the "RCF").

The New Facilities provide the Group with enhanced liquidity and long-term financing until the maturities of the Term Loan and the RCF in 2026 and 2025, respectively. The Term Loan and, as required, an initial simultaneous drawing of the RCF will be used to repay and refinance in full all of TRG's existing debt facilities namely the TRG Plc RCF, the CLBILS Facility, the Wagamama Notes and the Wagamama RCF (the "Existing Facilities") which were all due to reach maturity by or before July 2022.

Following the utilisation of the New Facilities, and the repayment of the Existing Facilities, the Group's financing arrangements will be simplified, as the Group's debt will be consolidated into one finance group at the TRG level which will provide a more efficient funding structure to support the Group's strategic initiatives.

The New Facilities covenant package provides significant covenant headroom for an extended period. In particular, the Group shall be subject only to a minimum liquidity covenant set at £40m (versus £50m under the existing TRG Plc RCF) until December 2022 with leverage covenants being tested on the super senior revolving credit facility from June 2022, and on the term loan from December 2022. There shall be no net leverage-based testing under the Term Loan until the period ending 31 December 2022 at which point the Group's net leverage covenant (as measured on a pre-IFRS 16 basis) shall be set at 5.0x before decreasing every six months to 4.0x by the period ending 31 December 2023 and thereafter.

We are delighted with the support provided to us by our lenders; however, we nevertheless remain focused on the reduction of our net debt and net leverage which has been temporarily impacted by the Covid-19 pandemic. Our new committed facilities are highly flexible in support of that objective, with both the Term Loan and the RCF subject to a margin ratchet which allows the Group's cost of debt to decrease according to prevailing net leverage (defined as pre IFRS 16 net debt/EBITDA). For illustrative purposes the initial weighted average cost of debt is expected to be approximately 7.0%, which would fall to approximately 6.0% were net leverage to go below 2.0x (defined as pre IFRS 16 net debt/EBITDA). In addition, whilst the Term Loan contains no contractual amortisation repayments, it provides flexibility to allow the Group to prepay the facility if desirable, with a significant proportion of the facility able to be prepaid without penalty in the 18 months following the initial drawdown.

£175m capital raise through firm placing and placing and open offer

In a separate announcement today, the Group is announcing a £175m capital raise. The capital raise facilitates an acceleration of the Group's medium-term leverage target as well as providing the flexibility to invest and grow the business. It marks the end of a deep restructuring programme and successful refinancing of the Group's long-term debt facilities. Specifically the net proceeds of the capital raise will be used in the following order of priority:

· firstly, to improve TRG's liquidity headroom to protect against any potential resurgence of the Covid-19 pandemic;

· secondly, to accelerate TRG's deleveraging to a target Net Debt to EBITDA[8] (pre-IFRS 16) below 1.5 times in the medium term; and

· thirdly, to strengthen TRG's flexibility to capitalise on selective site expansion in its Wagamama (UK restaurants, UK delivery kitchens) and Pubs businesses, where TRG expect there to be good and profitable opportunities.

3. Ready for Relaunching the business

Market overview

The number of casual dining outlets in the UK is expected to decline by 30 to 35% from the end of 2019 to the end of 2021, with a number of long-established, multi-site casual dining brands having permanently closed a significant proportion of their estate following a series of restructuring initiatives.

The delivery market has also grown rapidly and was worth £9.8 billion in 2020, a 40% increase over the two previous years (according to the Rebuilding of Hospitality 2021 to 2025 report and MCA Food service delivery report 2019). TRG believes the delivery market can continue to grow quickly, and it represents a significant strategic opportunity, particularly for the operators with the right scale, brands and capability set.

Ready for a rapid and profitable reopening

The Group currently has approximately 200 sites trading for delivery and takeaway across its Wagamama and Leisure businesses. The trading performance of those sites has been very encouraging. With this strong operating platform in place, the Group has good capability to deliver an accelerated reopening plan for dine-in trading, once the current restrictions for hospitality businesses end, with all viable sites being reopened within two weeks. In addition, mothballed Concessions sites can be quickly reactivated.

Sales densities should recover quickly with the significant capacity that has already left the market and the pent-up demand for hospitality given the prolonged period of closure.

The Group will also be relaunching from an improved cost base with 50% of its leasehold estate now on a turnover rent structure, as well as benefitting from previous investments made in technology apps, screens, visors, hand sanitisers and extensive team training to make premises and operations Covid-19 secure.

Current Trading and Outlook

As per the restrictions announced by the English, Scottish and Welsh governments in January 2021, the Group currently has no sites able to trade for dine-in, and is operating delivery and click-and-collect services across approximately 200 sites in its Wagamama and Leisure businesses. The performance of delivery and takeaway for those sites has been extremely encouraging with average weekly delivery and takeaway sales being c.2.5x pre-Covid-19 levels for Wagamama and c.5.0x pre-Covid-19 levels for Leisure (for the four weeks to 28 February 2021).

The Board is encouraged by the welcome news of the initial success of the vaccination programme currently being rolled out, and believes the Group is well positioned to benefit from a sustained removal of restrictions over time given its previous encouraging trading performance following the first lockdown and the strong operating platform in place. However, in the near term, the Board anticipates that the outlook remains uncertain with trading disrupted while government restrictions for hospitality businesses are in place.

Summary

The Group is well positioned to deliver long-term shareholder value:

· TRG is operationally a much stronger business following the restructuring with four distinct pillars all capable of delivering good sustainable shareholder returns;

· we have a secure long-term capital structure and now enjoy the flexibility to take advantage of selective market growth opportunities; and

· we have a strong operating platform to relaunch our business and deliver an accelerated reopening plan

TRG's response to the Covid-19 pandemic

It has been an extraordinary and unprecedented period for the hospitality sector and the wider economy. Throughout the year, the Group has acted decisively and at pace, ensuring the health and safety of our customers and colleagues, whilst also taking the right steps to protect the future of the business. The steps taken are summarised below.

Decisive actions taken in response to Covid-19

To address the effects of the pandemic and the lockdown measures put in place by the Government, swift and decisive action has been taken by the Group, including the following measures:

· focus on safeguarding TRG's colleagues and customers;

· costs during the first national lockdown were reduced to a maximum of only c. £3.5m per month. Cash-burn during the November national lockdown was minimised to c. £5.5m for the month (including rents payable under the terms of the Leisure CVA as well as employer contributions towards furlough payments);

· action to address working capital pressures, including contract renegotiations with our supportive supplier base and the agreement of deferred payment plans;

· a significant and immediate reduction in the capital expenditure of the Group to no more than £40.0m for 2020;

· accessing government support where appropriate including:

o the furloughing of up to 20,000 employees across the restaurants and head office under the Government's Coronavirus Job Retention Scheme;

o agreement of payment plans with HMRC under the "Time to Pay" scheme to defer payment of PAYE and National Insurance; and

o VAT has been deferred under the VAT Deferral Scheme offered by the Government which allowed all VAT payments between March and June 2020 to be deferred to 2021.

Banking facilities and liquidity

In order to strengthen our liquidity, the Company carried out a placing of shares on 8 April 2020 which raised net proceeds of £54.6m from institutional shareholders. In addition, we are announcing today a further capital raise of £175m to ensure the long term stability of the Group.

We also achieved increased flexibility in our banking facilities with our very supportive lending group which has included full covenant waivers on the existing facilities to September 2021, subject to maintaining a minimum liquidity of £50m, accessing £50m through the CLBILS scheme supported by Lloyds Bank, and increasing the revolving credit facilities from Santander.

As covered above, the Group secured post year-end long term committed financing to ensure the long term security of the business.

Remuneration

There have been voluntary pay sacrifices by:

· TRG's Executive Directors (40% of salary by Andy Hornby, CEO, and 20% of salary by Kirk Davis, CFO from 1 April 2020 to 30 June 2020, both of whom have also voluntarily foregone their bonuses for FY 2019 and the Remuneration Committee exercised its discretion to resolve that no annual bonuses will be paid to the Executive Directors for FY 2020);

· a voluntary 40% reduction of Non-Executive Directors' fees from 1 April 2020 to 30 June 2020 (and reduction in the number of Non-Executives from six to five);

· a majority of staff at head office (with pay sacrifices ranging from 20% to 40% of salary) from 1 April 2020 to 30 June 2020; and

· all TRG Directors voluntarily waiving 20% of their salaries/fees from 1 July 2020 until 31 March 2021.

Restricted trading and Covid-19 health and safety measures

At various times from early July, we have been able to open parts of our estate to dine-in trade. Extensive planning was done in each division with protocols and procedures in place to ensure colleague and customer safety whilst providing an enjoyable and authentic hospitality experience. Operational changes we have made at various times include:

· Guest and team safety: introducing innovative sliding screens in Wagamama which help seat groups safely apart along our iconic benches; taking advantage of the spacious layout of the internal dining areas and many large beer gardens of our Pubs to accommodate social distancing; adapted table spacing; increased cleaning and sanitation and use of PPE;

· Technology: introduction of new "Pay at Table" functionality in our Wagamama and Pubs businesses with very encouraging uptake and has been well received by our guests; and

· Optimising off-trade channels: growth of delivery activity along with the enhanced click and collect proposition and further development of online-only brands.

Financial Review

The transition to IFRS 16, which is described in detail in note 1 to the financial statements, has had a significant impact upon the presentation of results but the prior periods have not been restated. We therefore show below the current period on both an IFRS 16 and an IAS 17 basis to allow comparability to the 2019 results.

Note 1 to the financial statements provides a reconciliation to allow readers to understand the differences between our current period results on an IAS 17 basis and those under IFRS 16, as well as the differences between adjusted and total results.

The adjusted measures (as shown on the face of the Income Statement, or in Note 1 to the accounts) are summarised below:

	52 weeks ended 27 December 2020 IFRS 16	52 weeks ended 27 December 2020 IAS 17	52 weeks ended 29 December 2019 IAS 17
	£m	£m	£m
Revenue	459.8	459.8	1,073.1

Adjusted¹ EBITDA	53.4	8.7	136.7

Adjusted¹ operating (loss)/profit	(49.7)	(30.5)	91.1
Adjusted¹ operating margin	(10.8%)	(6.7%)	8.5%

Adjusted¹ (loss)/profit before tax	(87.5)	(47.9)	74.5

Exceptional items before tax	(40.1)	n/a	(111.8)
Statutory (loss) before tax	(127.6)	n/a	(37.3)
Statutory (loss) after tax	(119.9)	n/a	(40.4)

Adjusted¹ EPS (pence)	(13.4)p	n/a	11.9p
Statutory EPS (pence)	(21.3)p	n/a	(8.2)p

¹ The Group's adjusted performance metrics such as Adjusted EBITDA are defined within the glossary at the end of this report

Trading results

The impact of Covid-19 has had a significant detrimental effect on our results for the year with trading for dine-in customers only operating for around four months of the year, and the remainder of the year we suffered a mix of full closures, delivery and takeaway-only trading or a combination of the above through the regional tiering restrictions. This has resulted in total revenue down 57% to £459.8m (2019: £1,073.1m). In all periods where we were permitted to trade without restrictions, all businesses traded well, and I was particularly encouraged by their ability to adapt to the constantly changing environment. In a year of significant challenges, we are particularly proud of two achievements. Firstly, our Q3 trading across all businesses was in line or ahead of the market, which has demonstrated the strength of our restructured business, and gives me great confidence in our ability to relaunch whenever we are able. Secondly, we have continued to grow our delivery and takeaway business so that our standalone average weekly sales through these channels are currently running at c.2.5x and c.5.0x pre-Covid 19 levels in our Wagamama and Leisure businesses respectively. These successes have given us greater resilience to the pandemic by allowing us to continue trading throughout lockdowns and tiered trading restrictions, and will set us up for future growth through delivery channels where we have welcomed new and existing customers through 2020.

The Group had to take swift and decisive action to protect the business, including several very difficult decisions in a very uncertain trading environment. The full details of our response to Covid are included in the "TRG's response to the Covid-19 pandemic" section. I would like to extend my thanks to the teams, both in the restaurants and in the head office who have adapted superbly to the challenges of 2020 and have pulled together to support the business and each other during this incredibly difficult year.

Measures used to monitor business performance in 2020 are based on the IAS 17 approach to lease accounting, which is consistent with prior years but does not include the impact of IFRS 16. On this basis, Adjusted operating profit fell to a loss of £30.5m (2019: profit of £91.1m) and Adjusted EBITDA was £8.7m (2019: £136.7m) due principally to the extended periods of closure and restrictions as highlighted above. Whilst the business reacted rapidly to reduce costs and minimise cash burn to only £3.5m per month in the first lockdown, due to the reduction in sales and fixed costs, there was a significant reduction in profitability.

Including the impact of IFRS 16, Adjusted¹ operating loss was £49.7m (2019: profit of £91.1m). On a statutory basis, the Group's operating loss was £89.8m (2019: loss: £20.7m), reflecting an exceptional pre-tax charge of £40.1m (2019: £111.8m) predominantly relating to the impairment of our asset base following the trading restrictions during the pandemic, and costs relating to the closure of our estate, offset by a credit relating to lease exits to restructure our Leisure business to deliver a higher quality, diversified estate. Adjusted¹ loss before tax for the period was £87.5m (2019: profit of £74.5m). The significant difference in loss under IFRS 16 is due to the differing accounting treatment of our rent concessions throughout the pandemic. Under IAS17, they are recognised in the year whereas we have elected to recognise them over the life of the lease under IFRS16. Adjusted¹ loss per share were 13.4p (2019: earnings per share of 11.9p). On a statutory basis, loss before tax was £127.6m (2019: loss of £37.3m). On a statutory basis, loss after tax was £119.9m (2019: Statutory loss of £40.4m).

Cash flow and net debt

Pre-lease liability net debt has increased this year from £286.6m to £340.4m, an increase of £53.8m despite the inflow of £54.6m via a capital placing in April 2020. Whilst trading has generated positive cash flows of £8.7m before working capital and interest, the partial unwind of trade creditors has led to an operating cash outflow of £18.2m (2019: inflow of £140.5m). Post-IFRS16, the net debt was £824.2m which was a reduction of £395.8m, or c.33%, from the 30 December 2019 figure of £1,220.0m. This reduction has been driven by the exit of 128 leases through the CVA process (£193.6m), 52 sites exited through the administration processes (£82.4m), and also the renegotiation of a number of Concession leases to remove the minimum guaranteed portion of rent (£140.0m).

In order to protect the business, capital expenditure has been restricted since March, with a total expenditure of £38.9m (2019: £73.3m). We opened three new Wagamama restaurants in the year (including two conversions from Leisure sites), two new Pubs and have constructed five new sites at Manchester airport that are due to open in 2021.

Despite these outflows, the Group had available facilities of £470.0m at year end and had cash headroom of £127.1m with a minimum liquidity requirement of £50.0m. Following the introduction of the January 2021 lockdown the business had reduced cash burn to around £5.5m per four week period and has experienced a further working capital outflow relating to trade creditors.

Summary cash flow for the year (on a pre IFRS 16 basis) is set out below:

	2020	2019
	£m	£m

Adjusted EBITDA (IAS 17 basis)	8.7	136.7
Working capital and non-cash adjustments	(26.9)	3.8
Operating cash flow	(18.2)	140.5
Net interest paid	(15.5)	(14.5)
Tax received/(paid)	5.1	(10.3)
Refurbishment and maintenance expenditure	(21.9)	(34.5)
Free cash flow	(50.5)	81.2
Development capital expenditure	(17.0)	(38.8)
Movement in capital creditors	(1.0)	(5.0)
Utilisation of onerous lease provisions	(9.3)	(12.6)
Exceptional costs	(34.9)	(28.5)
Dividends	-	(17.5)
Proceeds from issue of share capital	54.6	-
Proceeds from disposals	3.3	27.3
Cash movement	(54.8)	6.1
Pre-IFRS 16 net debt brought forward	(286.6)	(291.1)
Derecognition of finance lease liabilities (IFRS 16 transition)	2.6	-
Non-cash movement in net debt	(1.6)	(1.6)
Pre-IFRS 16 net debt carried forward	(340.4)	(286.6)

Lease liabilities (IFRS 16 basis)	(483.8)	(933.4)
Post-IFRS 16 net debt carried forward	(824.2)	(1,220.0)

Refinancing

As outlined in the business review section, the Group has post year-end signed a £500m debt package. These facilities consist of a £380m term loan expiring in Q2 2026, and a £120m super senior revolving credit facility expiring in Q2 2025. The term loan is available to the Group to draw upon until 31 May 2021 and will be used to repay the current £225m bond, the drawn portion of the revolving credit facilities, and £50m of CLBILS facilities.

In addition, we have announced today, a capital raise of £175m as outlined in the business review section.

Going Concern

The directors have adopted the going concern basis in preparing the Annual Report and Accounts after assessing the Group's principal risks including the risks arising from Covid-19.

The outbreak of Covid-19 and its continuing impact on the economy, and specifically the hospitality sector, casts uncertainty as to the future financial performance and cash flows of the Group. When assessing the ability of the Group to continue as a going concern the Directors have considered the Group's financing arrangements, likely trading patterns through the recovery, and the possibility of future lockdowns or social restrictions.

The Principal Risks and Uncertainties are disclosed in the Risk Committee Report. These have been considered by Directors in forming their opinion. The Directors have reviewed financial projections to 31 March 2022 (the review period), containing both the base case and a severe stress case. In the severe stress case, the current national lockdown is forecast to continue until 17 May 2021, and the business is then operating under social restrictions (in line with October 2020) until the end of December 2021. Whilst this is significantly worse than the 'Road to Recovery' announced by the UK government on 22 February 2021, the Directors considered it necessary to plan for the potential scenario that the recovery is significantly delayed. In addition, due to restrictions on international travel, the Concessions business is also forecast to be closed completely during 2021. The projections assume that whilst there are social restrictions which impact our ability to trade normally, the UK Government will continue to provide support via the Coronavirus Job Retention Scheme. Whilst this has currently been announced as ending in September 2021, the projections assume this will be extended to protect employment if required. The gross proceeds of the underwritten capital raise of approximately £175m as announced on 10 March 2021 and which is subject to shareholder approval have also been included in both forecasts. In both forecasts, the Group has sufficient liquidity, via its new facilities, to finance operations for at least the next twelve months to the end of March 2022. The Group will draw on the new Term loan before the end of May 2021, by which time the Group is contracted to have made a single once-only drawdown of between £230m and £380m, simultaneously repaying the existing RCF, CLBILS and bond debt. In both base case and stress case scenarios it is assumed that £380m of term loan facility will be drawn down. The exact amount will be determined by the Board taking relevant factors into account on drawdown with the objective of ensuring a reasonable level of cash headroom throughout the review period, based on the forecast cash flows at the time. From signing of the new debt agreements the Group will be bound by the covenants in those new facilities which consist of a minimum liquidity of £40m until December 2022 followed by leverage covenants being tested on the super senior revolving credit facility from June 2022, and on the term loan from December 2022 (see Note 27 of the Annual Report for details of covenants). There are no leverage covenant tests in the review period.

The Directors have concluded that the conditionality of the capital raise, requiring shareholder approval at the General Meeting on 29 March 2021, represents a material uncertainty to the Directors' going concern assessment. For the purposes of both the 'base' and 'stress' case, this capital raise is forecast to complete. Should it not complete, the Group's liquidity will be challenged. In the 'base case', the covenants and minimum liquidity requirements are not forecast to be breached, but in the 'stress case', the minimum liquidity covenant would be breached in the review period unless sufficient alternate strategies could be implemented. In pre-marketing the capital raise, Management has conducted a number of meetings with investors covering over 50% of the share register and expects to receive shareholder approval for the capital raise at the forthcoming General Meeting. However, this is not guaranteed, and the vote may not pass. If approval was not obtained, the Group would aim to take a number of co-ordinated actions designed to avoid a covenant breach, including further discussions with its landlords, selective disposal of assets, further cost reduction programmes, or other commercial actions. The Board is confident that shareholder approval will be obtained and therefore has a reasonable expectation that the Group has adequate resources to continue in operational existence for the period to 31 March 2022, being at least the next twelve months from the date of approval of the Annual Report and Accounts. On this basis, the Directors continue to adopt the going concern basis in preparing these accounts. Accordingly, these accounts do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Group were unable to continue as a going concern.

Exceptional costs

An exceptional pre-tax charge of £40.1m has been recorded in the year (2019: £111.8m). The key elements of this cost are below:

- A net impairment charge of £37.1m (2019: £105.8m) which represents the reduced trading potential of a number of sites during the second half of 2020, and also in the recovery phase through the next couple of years within our Concessions business.

- Administration costs and write-offs of £9.9m relating to Chiquito Limited and Food & Fuel Limited.

- A credit from restructuring the Leisure business of £20.0m (2019: £nil). There are a number of components of this with the most significant being:

o £18.2m of staff restructuring costs;

o A cost of £12.7m from assets disposed as part of the estate restructuring

o A £7.5m provision for property costs on sites that were exited via the CVA. These sites have no associated rent costs but the Group is still liable for Business Rates until the end of the lease.

o A credit of £21.3m from a number of leases exited earlier than expected

o A net credit of £26.5m from the removal of lease liabilities of £193.6m, offset by a corresponding write-down in the assets of £167.1m following the completion of the CVA.

o A £10.6m credit from reduction in minimum rents obtained in negotiations with our airport partners

- Closure costs of £5.5m relating to the first national lockdown. This includes stock wastage, maintenance and security costs while closed.

- Professional fees of £4.4m have been incurred in the year relating to various corporate activities to restructure and refinance the business.

- Integration costs of £3.2m (2019: £11.2m) relating to costs incurred in the integration of Wagamama and the project costs to achieve the synergy cost saving and site conversion programme.

The tax charge relating to these exceptional charges was £4.3m (2019: credit of £13.1m).

Cash expenditure associated with the above exceptional charges was £34.9m in the year (2019: £28.5m) relating principally to the staff restructuring, closure costs, and professional fees as discussed above. The remainder of the exceptional items were non-cash in nature.

Tax

The Adjusted tax credit for the year was £12.0m (2019: charge of £16.3m), summarised as follows:

	2020	2019
	£m	£m

Corporation tax	(8.8)	15.5
Deferred tax	(3.2)	0.8
Total	(12.0)	16.3
Effective adjusted tax rate	13.7%	21.8%

The effective adjusted tax rate for the year was 13.7% compared to 21.8% in the prior year. The loss in the year has meant that the Group has losses to carry forward in to 2021, on top of the net tax receipt of £5.1m which relates to carrying back 2020 losses against tax paid in relation to 2019 profits. The amount of tax carried forward is lower than the UK corporation tax rate of 19% due to restrictions in the amount of interest that can be deducted given the loss-making position, and other costs not deductible for tax purposes. Further detail on the tax for the year is in Note 8 to the accounts.

Viability Statement

In accordance with provision 31 of the UK Corporate Governance Code (July 2018) (the "Code"), the Directors have assessed the viability of the Group over a two-year period to December 2022.

The Directors believe that two years is the appropriate time-period over which to evaluate long term viability and this is consistent with the Group's current strategic planning process. In the prior year, the Directors took a view across three years but due to the uncertainty around Covid-19, it is deemed that less confidence can be placed on longer term forecasts. Given the uncertain trading environment in the UK, there is considerable uncertainty in these forecasts. The Board is encouraged by the recent government announcements of the 'Road to Recovery' and expects to be able to open for dine-in customers from 17 May 2021, and earlier for sites with external covers. However, Management has prepared, and the Board has considered two key scenarios:

- A 'base case' whereby the national lockdown is in operation until 17 May 2021 followed by two months of trading impacted by social restrictions (in line with October 2020) with around a 20% reduction in sales with normal trade resuming in August 2021. The projections assume the extension of business support initiatives in line with prior government policy, principally through the extension of VAT reduction to 5% and business rates relief to 17 May 2021(i.e. during the period of national lockdown restrictions) and the extension of the Coronavirus Job Retention Scheme until the middle of July 2021 (i.e. during the period of social restrictions). Due to the impact of the pandemic on international travel, only 40% of our concession sites are forecast to be trading in 2021.

- A 'stress case' whereby the national lockdown is in operation until 17 May 2021 followed by trading impacted by social restrictions (in line with October 2020) to the end of December 2021. Government support is the same as in the 'base case' but with the Coronavirus Job Retention Scheme extended beyond the currently announced policy of September 2021 to the end of December 2021 due to the extended period of social restrictions. The Concessions business is also closed for the whole of 2021 reflecting the increased concerns around international travel.

Measures have already been taken in 2020 and 2021 to protect the business and to restrict the future cash outflows as reported in the company's Covid-19 response.

As announced on 1 March 2021, the Group has entered into two new facilities agreements under which £500m of debt facilities have been made available to the Group, comprising a package of £380m of new term loan and £120m super senior RCF maturing in Q2 2026 and Q2 2025 respectively and so has committed facilities for the duration of the period under review. In due course, the Group's existing revolving credit and CLBILS facilities will be repaid and cancelled, and the Wagamama bond will be repaid.

As detailed in the Annual Report, the Board has conducted a robust assessment of the principal risks facing the business. The resilience of the Group to the impact of these risks has been assessed by applying a severe but plausible sensitivity to the cash flow projections based on past experience. This includes modelling the different scenarios above.

After careful consideration of the forecasts and risks facing the business, the Directors have concluded that the conditionality of the capital raise, requiring shareholder approval at the General Meeting on 29 March 2021, represents a material uncertainty to the Directors' going concern assessment. For the purposes of both the 'base' and 'stress' case, this capital raise is forecast to complete. Should it not complete, the Group's liquidity will be challenged. In the 'base case', the covenants and minimum liquidity requirements are not forecast to be breached, but in the 'stress case', the minimum liquidity covenant would be breached in the review period unless sufficient alternate strategies could be implemented. In pre-marketing the capital raise, Management has conducted a number of meetings with investors covering over 50% of the share register and expects to receive shareholder approval for the capital raise at the forthcoming General Meeting. However, this is not guaranteed, and the vote may not pass. If approval was not obtained, the Group would aim to take a number of co-ordinated actions designed to avoid a covenant breach, including further discussions with its landlords, selective disposal of assets, further cost reduction programmes, or other commercial actions. The Board is confident that shareholder approval will be obtained and therefore has a reasonable expectation that the Group has adequate resources to continue in operational existence at least for the period to the end of December 2022.

Taking account of the Group's current position, the material uncertainty described above, the principal risks facing the business, sensitivity analysis, as well as the potential mitigating actions that the company could take, and the experience that the company has in adapting the business to change, the Board has a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the two-year period of assessment.

Further details on the forecast process and assumptions can be found in Note 1 to the accounts.

Selected FY21 Guidance

Net debt (pre-IFRS 16) of c.£400m as at 28^th February 2021 with key movements since year-end comprising:

· £40m working capital outflow due to unwind of trade creditor positions, VAT payments and timing benefit of certain payments at year-end e.g. payroll costs

· £6m of interest payments primarily due to wagamama bond interest

· Operating cash-burn of £12m over the first 2 months of the financial year

£30m of liabilities relating to deferred rent and VAT deferral to be paid through 2021, which will be offset as the trade creditor position rebuilds in 2021

Capital expenditure is expected to be c.£30m for the full-year

Exceptional cash costs expected to be c.£25m due to refinancing and corporate transaction costs

P&L Depreciation expected to be c.£40m-£42m (pre-IFRS 16 basis)

P&L Interest expected to be c.£25m-£28m (pre-IFRS 16 basis), pre capital raise

IFRS 16

The Group has adopted IFRS 16 "Leases" in its accounts for the year ended 27 December 2020 and so these Accounts are the first to include the impact of IFRS 16. The Group has decided to adopt the standard as at 30 December 2019 without any restatement of the results for prior periods, which continue to be presented under IAS 17 and which may therefore not be fully comparable.

The impact of IFRS 16 is twofold:

· firstly, to create a lease liability for rental costs and corresponding right of use asset in the balance sheet, and

· secondly, to remove the rental charge from the income statement and replace it with a depreciation charge in respect of the right of use asset and a finance charge in respect of the unwinding of the lease liability.

Accordingly, and relative to the previous lease accounting standard IAS 17, IFRS 16 sees the Group report:

· a higher level of adjusted EBITDA. EBITDA no longer includes the IAS 17 rent cost and rises by £44.7m;

· a higher adjusted operating loss. The increased depreciation is £63.9m and so greater than the rent expense removed and so operating loss is higher by £19.2m;

· a higher level of loss before tax. The combined IFRS 16 charges for depreciation of the right of use asset and interest on the lease liability exceed the IAS 17 rent charge by £39.6m. This higher cost is in relation to the differing accounting treatment of our rent concessions throughout the pandemic. Under IAS17, they are recognised in the year whereas we have elected to recognise them over the life of the lease under IFRS16; and

· a higher level of net debt, reflecting the inclusion of a net additional £483.8m of capitalised lease liabilities within net debt.

Environmental and Community initiatives

The Group remains committed to acting as a responsible business and continues to both develop new initiatives, and enhance existing ones, so as to progress its environmental, social and community agenda. Our people remain at the heart of our business and have shown extraordinary commitment during the year. We have introduced a new learning and development platform to support career opportunities within the Group, whilst also enhancing our engagement and communication tools, with a heightened focus on employees' physical and mental health. Our focus on the mental health agenda is also echoed through Wagamama's ongoing partnership with "YoungMinds", a charity fighting for children and young people's mental health.

The Group also continues to improve its environmental credentials and is a founding member and co-chair of the Hospitality Zero Carbon Forum, which is working to define and implement a strategic roadmap to net zero carbon emissions for UK Hospitality companies. Additionally, Frankie & Benny's and Chiquito have partnered with "Too Good To Go", the world's largest B2C market place for surplus food, focused on reducing food waste.

The Restaurant Group plc
Consolidated income statement
		52 Weeks ended 27 December 2020


		Trading	Exceptional items
		business	(Note 6)*	Total
	Note	£'000	£'000	£'000

Revenue	3	459,773	-	459,773

Cost of sales		(470,597)	(32,518)	(503,115)

Gross (loss)/profit	4	(10,824)	(32,518)	(43,342)

Share of results of associate		(623)	-	(623)
Administration costs		(38,264)	(7,614)	(45,878)

Operating (loss)/profit		(49,711)	(40,132)	(89,843)

Interest payable	7	(38,145)	-	(38,145)
Interest receivable	7	400	-	400

(Loss)/profit on ordinary activities before tax		(87,456)	(40,132)	(127,588)

Tax on (loss)/profit from ordinary activities	8	12,004	(4,304)	7,700

(Loss)/profit for the year		(75,452)	(44,436)	(119,888)

Other comprehensive income:
Foreign exchange differences arising on consolidation		91	-	91
Total comprehensive (loss)/income for the year		(75,361)	(44,436)	(119,797)

(Loss)/earnings per share (pence)
Rights adjusted basic	9	(13.4)	-	(21.3)
Rights adjusted diluted	9	(13.4)	-	(21.3)



EBITDA**		53,450	102,788	156,238

Depreciation, amortisation and impairment		(103,161)	(142,920)	(246,081)

Operating profit/(loss)		(49,711)	(40,132)	(89,843)

* Exceptional Items include charges and gains in relation to impairment, closure, restructuring, integration and professional fees

** EBITDA is defined as Earnings before interest, tax, depreciation, amortisation and impairment

The Restaurant Group plc
Consolidated income statement
		52 Weeks ended 29 December 2019*


		Trading	Exceptional items
		business	(Note 6)	Total
	Note	£'000	£'000	£'000

_Revenue	₃	_1,073,052	_-	_1,073,052

_{Cost of sales}		_(930,566)	_(117,894)	_(1,048,460)

_{Gross profit/(loss)}	₄	_142,486	_(117,894)	_24,592

_{Administration costs}		_(51,393)	_6,068	_(45,325)

_{Operating profit/(loss)}		_91,093	_(111,826)	_(20,733)

_{Interest payable}	₇	_(16,660)	_-	_(16,660)
_{Interest receivable}	₇	₉₈	_-	₉₈

_{Profit/(loss) on ordinary activities before tax}		_74,531	_(111,826)	_(37,295)

_{Tax on profit/(loss) from ordinary activities}	₈	_(16,260)	_13,149	_(3,111)

_{Profit/(loss) for the year}		_58,271	_(98,677)	_(40,406)

_{Other comprehensive income:}
_{Foreign exchange differences arising on consolidation}		₅₇₈	_-	₅₇₈
_{Total comprehensive income for the year}		_58,849	_(98,677)	_(39,828)

_{Earnings per share (pence)}
_{Rights adjusted basic}	₉	_11.9	_-	_(8.2)
_{Rights adjusted diluted}	₉	_11.9	_-	_(8.2)



_EBITDA		_136,743	_(6,038)	_130,705
_{Depreciation, amortisation and impairment}		_(45,650)	_(105,788)	_(151,438)
_{Operating profit/(loss)}		_91,093	_(111,826)	_(20,733)

*The income statement for the period to 27 December 2020 reflects the adoption of IFRS 16 during the period, but comparatives have not been restated. For a description of the impact, refer to note 1

The Restaurant Group plc		At 27 December 2020	At 29 December 2019
Consolidated balance sheet	Note	£'000	£'000

Non-current assets
Intangible assets	10	599,493	616,787
Right-of-use assets*	11	368,888	-
Property, plant and equipment	12	305,614	335,710
Net investment in subleases*	15	3,022	-
Fair value lease assets*		-	1,211
		1,277,017	953,708

Current assets
Inventory		5,124	9,274
Other receivables		15,544	21,924
Net investment in subleases*	15	600	-
Prepayments		8,795	26,088
Cash and cash equivalents	17	40,724	49,756
Assets of disposal group held for sale		-	4,081
Current tax asset		89	-
		70,876	111,123

Total assets		1,347,893	1,064,831

Current liabilities
Overdraft		-	(9,950)
Trade and other payables		(116,727)	(188,287)
Corporation tax liabilities		-	(6,210)
Provisions	14	(4,258)	(14,549)
Lease liabilities*	15	(91,478)	-
Liabilities of disposal group help for sale		-	(4,081)
		(212,463)	(223,077)

Net current liabilities		(141,587)	(111,954)

Long-term borrowings		(381,118)	(323,822)
Other payables		(1,321)	(26,077)
Fair value lease liabilities*		-	(9,605)
Deferred tax liabilities		(40,704)	(42,007)
Lease liabilities*	15	(392,310)	-
Provisions	14	(8,347)	(38,344)
		(823,800)	(439,855)

Total liabilities		(1,036,263)	(662,932)

Net assets		311,630	401,899

Equity
Share capital		165,880	138,234
Share premium		276,634	249,686
Other reserves		(3,896)	(5,921)
Retained earnings		(126,988)	19,900
Total equity		311,630	401,899

* The Group has implemented IFRS 16 during the period, resulting in the recognition of lease assets and liabilities in 2020 and removal of certain lines but without any restatement of comparative periods. Further details are given in note 1.

The Restaurant Group plc
Consolidated statement of changes in equity

		Share	Share	Other	Retained	Total
		capital	premium	reserves	earnings
	Note	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2018		138,234	249,686	(7,158)	77,830	458,592

Profit for the year		-	-	-	(40,406)	(40,406)
Other comprehensive income		-	-	578	-	578
Total comprehensive (loss)/ income for the period		-	-	578	(40,406)	(39,828)
Dividends		-	-	-	(17,524)	(17,524)
Share-based payments - credit to equity		-	-	576	-	576
Deferred tax on share-based payments taken directly to other reserves		-	-	83	-	83


Balance at 29 December 2019		138,234	249,686	(5,921)	19,900	401,899
Adjustment for IFRS 16 transition		-	-	-	(27,000)	(27,000)
Balance at 30 December 2019 (revised)		138,234	249,686	(5,921)	(7,100)	374,899

Loss for the year		-	-	-	(119,888)	(119,888)
Other comprehensive income		-	-	91	-	91
Total comprehensive (loss) / income for the period		-	-	91	(119,888)	(119,797)
Share issue		27,646	26,948	-	-	54,594
Share-based payments - credit to equity		-	-	2,016	-	2,016
Deferred tax on share-based payments taken directly to other reserves		-	-	(82)	-	(82)

Balance at 27 December 2020		165,880	276,634	(3,896)	(126,988)	311,630

Other reserves represents the Group's share-based payment transactions, shares held by the employee benefit trust and treasury shares held by the Group.

The Restaurant Group plc
Consolidated cash flow statement
		52 Weeks ended 27 December 2020	52 Weeks ended 29 December 2019
	Note	£'000	£'000


Operating activities
Cash generated from operations	16	3,216	140,501
Interest received		173	98
Interest paid		(15,679)	(14,638)
Corporation tax repayment / (paid)		5,111	(10,252)
Payment against provisions*	14	-	(12,642)
Payment on exceptionals	6	(34,860)	(28,464)
Net cash flows from operating activities		(42,039)	74,603

Investing activities
Purchase of property, plant and equipment		(37,387)	(75,972)
Purchase of intangible assets	10	(1,883)	(2,334)
Proceeds from disposal of property, plant and equipment		3,343	27,325
Investment in associate		(623)	-
Net cash flows from investing activities		(36,550)	(50,981)

Financing activities
Net proceeds from issue of ordinary share capital		54,593	-
Repayment of obligations under leases*	15	(30,777)	-
Repayment of overdraft	17	(9,950)	-
Repayment of borrowings	17	(24,000)	(32,000)
Drawdown of borrowings	17	80,611	-
Drawdown of overdraft		-	9,950
Upfront loan facility fee paid	17	(934)	-
Dividends paid to shareholders		-	(17,524)
Decrease in obligations under finance leases	17	-	(170)
Net cash flows used in financing activities		69,543	(39,744)

Net increase in cash and cash equivalents		(9,046)	(16,122)

Cash and cash equivalents at the beginning of the year	17	49,756	65,903
Foreign exchange movement in cash		14	(25)

Cash and cash equivalents at the end of the year		40,724	49,756

* The Group has adopted IFRS 16 in the period, but without any restatement of comparative periods. The presentation of cash payments above has therefore changed for certain lines. Refer to note 1 for a description of the impact of IFRS 16.

1 General Information

Corporate information

The Restaurant Group plc (the 'Company') is a public listed company incorporated and registered in Scotland. The consolidated financial statements of the Group for the year ended 27 December 2020 comprise the Company and its subsidiaries (together referred to as the 'Group'). The principal activity of the Group during the period continued to be the operation of restaurants.

The 2021 AGM will be held on 25 May 2021. The notice convening this meeting is expected to be sent to shareholders in mid-April, along with details regarding proxy voting, and will be made available at the same time at www.trgplc.com/investors/reports-and-presentations.

Accounting policies

Basis of preparation

Whilst the information included in this preliminary announcement has been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, and in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

The consolidated financial statements comprise the financial statements of the Group as at 27 December 2020 and are presented in UK Sterling and all values are rounded to the nearest thousand (UK £'000), except when otherwise indicated.

Going concern basis

The Directors have adopted the going concern basis in preparing these accounts after assessing the Group's principal risks including the risks arising from Covid-19.

The Group had committed facilities of £470.0m at 27 December 2020 consisting:

• £225.0m high-yield bond expiring July 2022;

• £160.0m TRG plc RCF and £50.0m of Coronavirus Large Business Interruption Loan Scheme (CLBILS) loans expiring June 2022; and

• £35.0m Wagamama super senior RCF, reducing to £32.5m in July 2021, reducing again to £20.0m in October 2021; and expiring in December 2021.

During 2020, the Group raised additional financing and flexibility in the form of:

• an equity placing, which raised net proceeds of £54.6 million;

• accessed £50.0m of CLBILS loans with Lloyds Banking Group, with a maturity of 30 June 2022;

• a £15.0m increase in the Wagamama super senior RCF; and

• extended the existing TRG plc RCF term by 6 months to 30 June 2022 and agreed a covenant waiver for June and December 2020.

Since the year-end, the Group has:

• agreed a new £500.0m package of debt facilities consisting of a £380.0m term loan expiring in 2026, and a £120.0m super senior Revolving Credit Facility expiring in 2025. These new facilities are subject to a Minimum Liquidity Requirement of £40.0m until 31 December 2022 and leverage covenant tests which begin in June 2022 for the RCF and December 2022 for the term loan. The Group is required to draw on the new term loan before the end of May 2021, in a single once-only drawdown of between £230.0m and £380.0m, simultaneously repaying the existing RCF, CLBILS and bond debt. The term loan and RCF drawdowns are subject to customary conditions and a change in control clause, all of which are under the control of the Directors.

• obtained covenant waivers for the current TRG and Wagamama super senior RCF through to September 2021; and

• announced an underwritten capital raise through a firm placing, and placing and open offer for £175.0m.

In undertaking a going concern review, the Directors have reviewed financial projections to 31 March 2022 (the review period) containing both the base case and a severe stress case. In both cases, it is assumed that the capital raise announced on 10 March 2021 is successful, however this is subject to shareholder approval in the General Meeting on 29 March 2021. If this is not approved then the Group is forecasting a breach under the stress case of the Minimum Liquidity Requirement within the review period. Management has conducted a series of pre-marketing meetings with investors covering over 50% of the share register and has received positive support for indications of their intention to subscribe for shares. However, this is not guaranteed, and the vote may not pass at the General Meeting. If approval was not obtained, the Group would aim to take a number of co-ordinated actions designed to avoid a covenant breach, including further discussions with its landlords, selective disposal of assets, further cost reduction programmes, or other commercial actions.

In both scenarios presented below it is assumed that all of the £380.0m term loan facility will be drawn down. The exact amount will be determined by the Board taking relevant factors into account on drawdown with the objective of maintaining similar levels of cash headroom based on the forecast cash flows at the time. The gross proceeds of the underwritten capital raise of approximately £175.0m as announced on 10 March 2021 and which is subject to shareholder approval have also been included in both forecasts.

Base case forecast

Management have prepared the Group's base case forecast, in which the current national lockdown is forecast to continue until the 17 May 2021, and the business is then operating under social restrictions (in line with October 2020) until the end of July 2021. However, the Concessions business is forecast to recover much more slowly due to the greater uncertainty on restrictions for international travel.

In the base case forecast, at the lowest point, total cash facilities are £191.4m and after taking account of the minimum liquidity requirement of £40.0m, available facilities do not go below £151.4m. The key judgement in this forecast is the length of the restrictions placed on hospitality, and the level of sales throughout both the national lockdowns, social restrictions and the subsequent recovery.

Stress case scenario

Management have also prepared a stress case, which reflects a severe but plausible scenario and assumes the current national lockdown is forecast to continue until 17 May 2021, and the business is then operating under social restrictions (in line with October 2020) until the end of December 2021. Whilst this is significantly worse than the 'Road to Recovery' announced by the UK government on 22 February 2021, the Directors considered it necessary to plan for the potential scenario that the recovery is significantly delayed. In addition, due to restrictions on international travel, the Concessions business is also forecast to be closed completely during 2021. The projections assume that whilst there are social restrictions which impact our ability to trade normally, the UK Government will continue to provide support via the Coronavirus Job Retention Scheme. Whilst this has currently been announced as ending in September 2021, the projections assume this will be extended to protect employment if required. The VAT reduction to 5% and business rates relief has been forecast during the period of national lockdown.

In this scenario total cash facilities are £173.9m and after taking account of the minimum liquidity requirement of £40.0m, available facilities do not go below £133.9m. This scenario does not take account of further mitigations under management's control such as interest deferral under the term loan structure or further cost and capital expenditure savings.

Conclusion

The Directors have concluded that the conditionality of the capital raise, requiring shareholder approval at the General Meeting on 29 March 2021, represents a material uncertainty which may cast significant doubt on the group's ability to continue as a going concern. The Board is confident that shareholder approval will be obtained and therefore has a reasonable expectation that the Group has adequate resources to continue in operational existence for the period to 31 March 2022, being at least the next twelve months from the date of approval of the Annual Report and Accounts. On this basis, the Directors continue to adopt the going concern basis in preparing these accounts. Accordingly, these accounts do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Group were unable to continue as a going concern.

Nature of financial information

The financial information contained within this preliminary announcement for the 52 weeks to 27 December 2020 and the 52 weeks to 29 December 2019 do not comprise statutory financial statements for the purpose of the Companies Act 2006, but are derived from those statements. The statutory accounts for The Restaurant Group plc for the 52 weeks to 29 December 2019 have been filed with the Registrar of Companies and those for the 52 weeks to 27 December 2020 will be filed on the 10^th of March 2020.

The auditor's reports on the accounts for both the 52 weeks to 27 December 2020 and 52 weeks to 29 December 2019 were unqualified and did not include a statement under Section 498 (2) or (3) of the Companies Act 2006.

The Annual Report will be available for Shareholders in March 2020

New accounting standards, interpretations and amendments adopted by the Group

IFRS 16 "Leases"

The Group has adopted IFRS 16 "Leases" on 30 December 2019. This new standard introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and lessees and supersedes the previous lease guidance including IAS 17 "Leases" and related interpretations.

IFRS 16 distinguishes leases from service contracts on the basis of control of an identified asset. For lessees, it removes the previous accounting distinction between (off-balance sheet) operating leases and (on-balance sheet) finance leases and introduces a single model recognising a lease liability and corresponding right-of-use asset for all leases except for short-term leases and leases of low-value assets. For lessors, IFRS 16 substantially retains existing accounting requirements and continues to require classification of leases either as operating or finance in nature.

Group as lessee

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

a) Right of use assets

Right-of-use assets are initially measured at the value of the corresponding lease liability and subsequently adjusted for depreciation and for any remeasurement of the lease liability as noted above. As is the case for other categories of assets, they may be assessed for impairment where required by IAS 36. As described later in this note, applicable pre-existing rent accruals and prepayments were included in assets on transition to IFRS 16.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are in line with the remaining lease term.

b) Lease liabilities

Lease liabilities under IFRS 16 are initially recorded at the present value of future lease payments (discounted using the Group's incremental borrowing rate, which we estimate with reference to our debt facilities and observed bond yields).

Lease liabilities include the net present value of fixed payments (including in-substance fixed payments), less any lease incentives receivable and variable payments, which might be linked to sales generated.

Variable lease payments that do not depend on an index or a rate but depend on sales or usage of the underlying asset are excluded from the lease liability measurement and recognised as expenses in the period in which the event or condition that triggers the payment occurs. Liabilities are subsequently adjusted for deemed interest charges and payments. Variable payment terms are used for a variety of reasons and dependent on turnover levels.

Lease liabilities may be recalculated in some situations as stipulated by IFRS 16, including where the terms of a lease are modified, which can also result in a separate lease being recognised. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. Such changes to the amount of the lease liability will be also reflected in the corresponding right-of-use asset, except where a reduction in the asset would result in a negative outcome, in which case the asset's value is reduced to nil and the residual credit recorded in profit or loss.

c) Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

The Group operates a number of freehold sites but its estate is predominantly leasehold and the implementation of IFRS 16 has therefore led to a substantial change in balance sheet outcomes, with material new assets and liabilities being recorded to reflect rental agreements that were previously not recorded in the Group's consolidated balance sheet.

Although the great majority of rental payments to landlords are now accounted for as payments to reduce lease liabilities, there remain some circumstances where rental payments continue to be accounted for as rental costs in the same fashion as previously; these include variable or turnover-contingent rents and also rentals for leases with a term of less than 12 months, in line with the requirements of IFRS 16.

In determining the lease term and assessing the length of the non-cancellable period of a lease, an entity shall apply the definition of a contract and determine the period for which the contract is enforceable. A lease is no longer enforceable when the lessee and lessor each has the right to terminate the lease without permission from the other party with no more than an insignificant penalty.

All the leasehold contracts that the Group enter into are for a finite and fixed period of time, however some of the contracts have break dates which unilaterally permit the Group to terminate the contract at a date that is earlier than normal contractual term end date, based on an estimate of lease term on inception. For the purposes of the preparation of the IFRS 16 numbers, the Group have identified a number of leases where use of the break date can been utilised based on an estimate of lease term on inception and notice period. The reason for the option to utilise the break date and potentially terminate the contracts early is due to the underlying trading performance of the identified restaurants which don't fulfil the commercial viability required by the Group. The impact of a decision to end leasehold contracts earlier than the contractual term would be to reduce the recognised IFRS 16 right of use asset and liability, as the future contractual payments, and subsequent discounting to present value, are curtailed in term.

Group as lessor

The Group has a number of contractual headlease agreements in place with its landlords, giving the Group the option to sub-lease these properties to licensees. Under IFRS16 the headlease has been recognised as a right-of-use asset and liability on the consolidated balance sheet, while any subleases are recognised as operating leases. This operating lease recognition is based on the substance of the transaction, as the sublease has a shorter tenure than the headlease and once the sublease ends, the use and benefit of the property returns to the Group.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term

Impact upon the Group's results and position

The implementation of IFRS 16 has had a substantial impact on the Group's financial captions and metrics, as below:

EBITDA and EBITDA margin	The removal of most rental costs and their replacement with depreciation and finance charges will result in substantially higher EBITDA and EBITDA margins.
Depreciation	Depreciation will increase significantly to reflect that charged on right-of-use assets.
Finance expense	Finance expenses will increase significantly to include deemed interest costs on lease liabilities.
Profit before Tax	There will be a significant impact over time, to reflect that the new depreciation and finance expenses will not likely match the rental costs they replace. Typically, profits will be slightly lower initially due to the front-loading of finance charges, but equalise over time.
EPS	A marginal impact on EPS is expected, in line with profit before tax.
Gross assets and liabilities	Gross assets and liabilities will both increase by comparable (but not normally identical) amounts.
Net assets	Net assets have reduced to reflect the impairment of certain right-of-use assets on transition. This adjustment is recorded in equity, as shown in the Statement of Changes in Equity.
Net debt	Although net debt for lender covenant purposes will continue to be measured on the former (IAS 17) basis, we have chosen to present this KPI inclusive of liabilities under IFRS 16. As a result, Net debt and its ratio to EBITDA will be different.

Transition from IAS 17 to IFRS 16

IFRS 16 provides a choice of two transition approaches, which are often termed "full retrospective" and "modified retrospective". The Group has chosen to apply the modified retrospective approach, with the effect that the Group's lease portfolio has been assessed and accounted for on transition under IFRS 16 but with the application of some practical expedients and without any restatement of comparative results, disclosures or balances. Therefore, the comparative information has not been restated and continues to be reported under IAS 17.

Upon transition, the Group's lease liabilities have been measured based upon the estimated remaining term and discounted based upon the Group's incremental borrowing rate on the date of implementation. IFRS 16 provides a choice between two methods in accounting for right-of-use assets on transition:

- Assets may be measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments; or

- Assets may be measured as if IFRS 16 had been applied since the beginning of each lease, applying however the transition-date discount rate

The majority of right-of-use assets have been measured initially to match their corresponding liability. For a small number, the Group has calculated a value based on historical lease activity. As a result of this and transition-dated prepayments and accruals, the initial asset and initial liability are not equal on 27 December 2020 and the difference is presented as an adjustment to equity as required by IFRS 16.

The Group has taken into account the practical expedients included within IFRS 16, as detailed below:

- Reliance on the previous identification of a lease (as defined by IAS 17) for all contracts that existed at the date of initial application;

- Reliance on previous assessment of whether leases are onerous instead of performing an impairment review;

- Accounting for operating leases with a remaining lease term of less than 12 months as at the transition date as short-term leases excluded from the scope of IFRS 16 (rental payments associated with these leases are recognised in the Income statement on a straight-line basis over the life of the lease); and

- Accounting for operating leases for low-value items as excluded from the scope of IFRS 16.

Financial position at 30 December 2019

	At 29 December 2019 as reported	IFRS 16	At 30 December 2019
	£'000	£'000

Non-current assets
Intangible assets	616,787	-	616,787
Property, plant & equipment	335,710	(1,932)	333,778
Right-of-use assets	-	819,499	819,499
Net investment in subleases	-	9,344	9,344
Fair value lease assets	1,211	(1,211)	-
	953,708	825,700	1,779,408

Current assets
Inventory	9,274	-	9,274
Other receivables	21,924	-	21,924
Net investment in subleases	-	1,359	1,359
Prepayments	26,088	(10,037)	16,051
Cash and cash equivalents	49,756	-	49,756
Assets of disposal group held for sale	4,081	-	4,081
	111,123	(8,678)	102,445

Total assets	1,064,831	817,022	1,881,853

Current liabilities
Overdraft	(9,950)	-	(9,950)
Trade and other payables	(188,287)	30,910	(157,377)
Corporation tax liabilities	(6,210)	-	(6,210)
Provisions	(14,549)	11,319	(3,230)
Lease liabilities	-	(128,598)	(128,598)
Liabilities of disposal group held for sale	(4,081)	-	(4,081)
	(223,077)	(86,369)	(309,446)

Non-Current liabilities
Long-term borrowings	(323,822)	-	(323,822)
Other payables	(26,077)	-	(26,077)
Fair value lease liabilities	(9,605)	9,605	-
Deferred tax liabilities	(42,007)	2,530	(39,477)
Lease liabilities	-	(804,849)	(804,849)
Provisions	(38,344)	35,061	(3,283)
	(439,855)	(757,653)	(1,197,508)

Total liabilities	(662,932)	(844,022)	(1,506,954)

Net assets/equity	401,899	(27,000)	374,899

Whereas the value for liabilities on inception is in line with the estimate provided in the 2019 Annual Report, the value of assets is slightly lower due to changes in the methodology applied to the initial impairment of assets.

Right-of-use assets and lease liabilities presented above do not include £35.2m of assets and £37.4m of liabilities relating to the US operations designated as "held for sale" at 29 December 2019, since these are adjusted to fair value on inception prior to disposal in January 2020.

Balances that have been adjusted on transition are as follows:

Property, plant & equipment	Certain lease premia had been capitalised into PP&E that are now incorporated into right of use assets.
Right-of-use assets	Newly-recognised assets on transition.
Other receivables	Newly-recognised net investments in sublease assets.
Fair value lease assets	A number of lease assets at fair value are now removed and incorporated into right-of-use assets.
Prepayments	Prepaid rent balances are now included in right-of-use assets.
Fair value lease liabilities	A number of lease liabilities at fair value are now removed and incorporated into right-of-use assets.
Lease liabilities	Newly-recognised lease liabilities.
Trade and other payables	Accruals for unpaid rent, rent reviews and other lease-related items are now removed and incorporated into right-of-use assets.
Provisions	The majority of onerous leases related to provisions for rent and therefore are replaced by lease liabilities.
Equity	Retained earnings is adjusted to take account of certain adjustments on transition (including initial impairment and the difference between transition assets and transition liabilities).

Reconciliation of lease liabilities to amounts previously disclosed as operating lease commitments

The liabilities recognised at 30th December 2019 can be reconciled to the operating lease commitments that were previously disclosed in note 24 to the 2019 Annual Report as shown below:

	£'000
Undiscounted future operating lease commitments at 29th December 2019	1,005,952
Reclassification from finance lease	2,613
Effect of assumptions about lease terms	149,912
Effect of discounting	(182,250)
Reclassification to Asset held for Sale	(32,965)
Working capital adjustments	(8,273)
Short term & low value item exemption	(1,542)
IFRS 16 lease liabilities at 30th December 2019	933,447

The weighted average discount rate applied to liabilities on inception was 3.20%.

Impact on financial performance in the period

The results used by the Directors to monitor and review the performance of the Group are to be prepared on an 'underlying' basis, which is based on the accounting standard IAS 17 as adjusted to show the benefit of COVID-19 related rent concessions in the period and a number of the key metrics used in this report are prepared on that basis. A reconciliation is provided below of the key differences between results under IFRS 16 and the basis used for management reporting.

	2020 Trading Underlying	Adjustments for IFRS 16	2020 Trading IFRS 16	Exceptional Items	2020 Total IFRS 16
	£'000	£'000	£'000	£'000	£'000
Revenue	459,773	-	459,773	-	459,773
Cost of sales	(451,375)	(19,222)	(470,597)	(32,518)	(503,115)

Gross loss	8,398	(19,222)	(10,824)	(32,518)	(43,342)
Share of result of associate	(623)	-	(623)	-	(623)
Administration costs	(38,264)	-	(38,264)	(7,614)	(45,878)

Operating loss	(30,489)	(19,222)	(49,711)	(40,132)	(89,843)
Interest payable	(17,558)	(20,587)	(38,145)	-	(38,145)
Interest receivable	173	227	400	-	400
Loss before tax	(47,874)	(39,582)	(87,456)	(40,132)	(127,588)


EBITDA	8,730	44,720	53,450	102,788	156,238
Depreciation, amortisation and impairment	(39,219)	(63,942)	(103,161)	(142,920)	(246,081)
Operating Loss	(30,489)	(19,222)	(49,711)	(40,132)	(89,843)

An explanation of the amounts in the "Exceptional items" column is provided in note 6.

The "Adjustments for IFRS 16" summarised above can be seen in the below reconciliation of trading profit before tax (excluding exceptional items) from the 'Underlying' basis to the IFRS 16 basis of accounting:

	£'000
Underlying Trading loss before tax	(47,874)
Removal of rent expenses	44,720
Net change in depreciation	(63,942)
Interest charged on lease liabilities	(20,587)
Interest receivable on net investments in subleases	227
Trading loss before tax under IFRS 16	(87,456)

2 Segmental analysis

Operating Segments

IFRS 8 Operating Segments requires operating segments to be based on the Group's internal reporting to its Chief Operating Decision Maker (CODM). The CODM is regarded as the combined Executive team of the Chief Executive Officer, and the Chief Financial Officer.

The Group has four segments of:

- Wagamama

- Pubs

- Leisure; and

- Concessions

The economic characteristics of these businesses, including Gross Margin, Net Margin, EBITDA and Sales trajectory, have been reviewed by the Directors along with the non-financial criteria of IFRS 8. It is the Directors' judgement that whilst there is some short term variability during the Covid recovery, all segments have similar economic characteristics in the medium to long-term and so meet the standard's criteria for aggregation. Consequently, no Segmental Analysis is provided.

In the prior year, the business was segmented into the 'Leisure' and 'Growth' businesses as the Leisure segment had a significant number of structurally unattractive sites which meant that both sales and profitability of this business were forecast to decline. Following the exit of these sites through the Leisure CVA, and the reduction in competition, this is no longer relevant. The Directors believe that all segments will grow from the 2020 base for the medium term.

Geographical Segments

The Group trades primarily within the United Kingdom. The Group operates restaurants in the United States and generates revenue from franchise royalties primarily in Europe and the Middle East. The segmentation between geographical location does not meet the quantitative thresholds and so has not been disclosed.

3 Revenue

Revenue has been generated from the operation of restaurants, with substantially all revenue generated within the United Kingdom. The remainder is attributable to restaurants within the United States, prior to the disposal of a controlling stake on 31 January 2020, and franchise royalties in Europe and the Middle East.

4 Profit for the year	2020	2019
	£'000	£'000
Profit for the year has been arrived at after charging/(crediting):
Amortisation (Note 10)	2,526	2,589
Depreciation on right of use asset (Note 11)	64,142	-
Depreciation on PPE (Note 12)	36,493	43,061
Impairment of property, plant and equipment and software (Note 10 and 12)	21,221	105,788
Impairment of right of use asset (Note 11)	121,698	-
Impairment on net investment in regards to subleases	6,648	-
Purchases of food, beverages and consumables	99,524	218,630
Inventory write downs*	3,578	-
Variable lease payments	3,278	-
Staff costs (Note 5)	202,844	392,690

Minimum lease payments**	-	110,118
Contingent rents**	3,278	15,617
Total operating lease rentals of land and buildings**	3,278	125,735
Rental income**	(660)	(2,766)
Net rental costs**	2,618	122,969

*Inventory write downs relate to amounts written down due to estate closures on account of COVID -19 restrictions, as well as the disposal of Food and Fuel Limited and Chiquito Limited.

**The balances stated reflects the adoption of IFRS 16 during the period, but comparatives have not been restated. For a description of the impact, refer to note 1.

5 Staff costs

a) Average staff numbers during the year (including Directors)	2020	2019
Restaurant staff	15,843	20,819
Administration staff	425	475
	16,268	21,294

	2020	2019
b) Staff costs (including Directors) comprise:*	£'000	£'000
Wages and salaries	163,506	358,959
Social security costs	17,742	27,285
Share-based payments	2,016	576
Pension costs and salary supplements	4,418	5,870
	187,682	392,690

	2020	2019
	£'000	£'000
c) Exceptional Staff Costs	15,162	870
Severance pay	15,162	870

	2020	2019
d) Directors' remuneration	£'000	£'000
Emoluments	1,301	1,909
Salary supplements	61	127
	1,362	2,036
Charge /(credit) in respect of share-based payments	498	(204)
	1,860	1,832

This is a net amount after Coronavirus Job Retention Scheme payments of £123.5m.

6 Exceptional items
	2020	2019
	£'000	£'000

Included within cost of sales:
- Impairment charges relating to trading sites	37,065	105,788
- Estate closure	5,508	-
- Disposal of assets in administration	9,877	-
- Onerous lease provisions in respect of closed and other sites	-	7,455
- Loss on assets held for sale	-	2,019
- Estate restructuring	(18,997)	2,632
- Release of other provision	(935)	-
	32,518	117,894
Included within administration costs:

- Integration costs	3,198	11,180
- Professional fees	3,178	-
- Disposal of US operation	1,238	-
- Profit from sale of property, plant and equipment	-	(17,248)
	7,614	(6,068)
Exceptional items before tax	40,132	111,826


Tax effect of exceptional Items	4,304	(13,149)
	4,304	(13,149)

Net exceptional items for the year	44,436	98,677

Impairment charges

An impairment charge has been recorded against certain assets to reflect forecast results at several our trading sites, which is deemed as material and not relating to underlying trade.

This charge comprises the below adjustments:

- An impairment of right-of-use assets of £21.9m (Note 13)

- An impairment of property, plant and equipment and software of £18.5m offset by an impairment reversal of £10.0m (Note 13)

- Expected credit losses of £6.6m in net investment assets relating to sublet properties, to reflect changes in estimated recoverability of amounts receivable from tenants

Further details on the impairment of non-current assets are given in Note 13

Estate restructuring

The Group has permanently closed a significant number of sites during the year, following the impact of the coronavirus pandemic. As a result of these closures, the Group has recognised a number of material and non-recurring charges and credits as noted below:

- Following the conclusion of the CVA on 29th June 2020, the reduction in lease liabilities resulted in a £193.6m exceptional credit during the year, offsetting the write-off of assets of £167.1m and therefore a net credit of £26.5m

- Derecognition of right of use assets of £30.3m and lease liabilities of £51.6m due to early termination of leases, which led to a credit of £21.3m

- Write-off of property, plant and equipment in closed sites of £12.7m

- Staff restructuring costs of £18.2m

- Professional fees in regards to the CVA of £1.8m

- Offset by rent concessions achieved following the impact of Covid 19 amounting to a credit of £10.6m

- Net gains from sale of PPE which lead to a credit of £0.8m

- A provision of £7.5m has been made for future obligations in sites that are permanently closed but for which the Group retains a liability to business rates

The provision for business rates mentioned above will be reviewed and remeasured in future periods and changes in the estimate will be reflected in exceptional items.

Estate closure

The Group has incurred a material and one-off amount of costs relating to the temporary enforced closure of our sites. Where these items are incremental and unrelated to continuing trading activity, we have identified them as exceptional and presented within the value shown above. The most significant components are:

- Site closure costs and inventory write offs of £4.0m

- Security and maintenance costs of £1.5m

Disposal of assets in administration

The Group has disposed of two UK subsidiaries through the administration process, with no proceeds as at year end. Losses through administration process, including professional fees, have been presented as an exceptional item as it is deemed as material, one-off and non-recurring. These include:

- A £14.5m charge relating to the disposal of goodwill relating to Food & Fuel Limited

- A £11.5m charge relating to the disposal of property, plant and equipment

- A £17.7m net gain relating to the disposal of £81.0m of lease liabilities and £63.3m of right-of-use assets

- £1.6m of costs relating to professional fees and working capital adjustments

Legal Provision Release

This is in relation to a provision made for legal costs in relation to a dispute which has been settled at less than initially anticipated, it has been deemed as exceptional due to the non-underlying nature of the event.

Integration costs

An exceptional charge of £3.2m (2019: £11.2m) has been recorded in the year in relation to the integration of Wagamama, relating to staff expenses, contractors, redundancy and contract exit costs, which are deemed as material and are unrelated to underlying trading and were part of the acquisition synergies expected from a major acquisition.

Professional fees

During the year, the Group incurred material one-off costs relating to corporate financing and restructuring activity. Since these costs are material, irregular and unrelated to underlying or ongoing trading, they are presented as exceptional items. The key items related to anticipated corporate activity (£3.0m) and attempted sale process for a number of sites (£0.2m).

Disposal of US operation

In January 2020, the Group sold a majority stake in its US operations to a third party and now accounts for these operations as an associate. Professional fees of £1.2m relating to the disposal are presented as exceptional owing to their material and non-underlying nature.

The tax effect relating to these exceptional charges was a debit of £4.3m, compared to a credit of £13.1m in 2019.

In 2019, there were net impairment charges of £105.8m incurred against property, plant and equipment and software assets, as well as onerous lease provisions for £7.5m. There was also an impairment of assets held for sale for £2.0m, which was incurred relating to Wagamama US sites which were under strategic review.

In 2019, a write off of £2.6m was also made to the carrying value of the property, plant and equipment for Leisure sites which converted to Wagamama.

In 2019, exceptional charges of £11.2m was recorded in relation to the integration of Wagamama and the Group also sold and leased back the head office building for a gain of £17.2m.

7 Net finance charges


	2020	2019
	£'000	£'000

Bank interest payable	15,497	14,413
Unwinding of discount on lease liabilities	20,977	-
Unwinding of discount on provisions	15	634
Amortisation of facility fees	1,620	1,423
Interest on obligations under finance leases	-	170
Other interest payable	36	20
Trading borrowing costs	38,145	16,660

Other interest receivable	(400)	(98)
Total interest receivable	(400)	(98)

Total net finance charges	37,745	16,562

8 Tax
	Trading	Exceptional	Total	Total
	2020	2020	2020	2019
a) The tax charge comprises:	£'000	£'000	£'000	£'000

Current tax
UK corporation tax	9,568	-	9,568	13,953
Adjustments in respect of previous years	(702)	-	(702)	(274)
Foreign tax relief	3	-	3	(3)
Foreign tax suffered	(24)	-	(24)	19
	8,845	-	8,845	13,695


Deferred tax
Origination and reversal of temporary differences	2,006	3,416	5,422	1,934
Adjustments in respect of previous years	876	-	876	(1,337)
Charge/(credit) in respect of rate change on deferred tax liability	277	(4,833)	(4,556)	-
Credit in respect of fixed asset impairment	-	(2,887)	(2,887)	(11,181)
	3,159	(4,304)	(1,145)	(10,584)

Total tax charge for the year	12,004	(4,304)	7,700	3,111


b) Factors affecting the tax charge for the year

The tax charged for the year varies from the standard UK corporation tax rate of 19% (2019: 19%) due to the following factors:

	Trading	Exceptional	Total	Total
	2020	2020	2020	2019
	£'000	£'000	£'000	£'000

Profit/(Loss) on ordinary activities before tax	(87,456)	(40,132)	(127,588)	(37,925)

Profit on ordinary activities before tax multiplied
by the standard UK corporation tax rate of 19% (2019: 19%)	(16,617)	(7,625)	(24,242)	(7,086)

Effects of:
Depreciation/impairment on non-qualifying assets	980	3,938	4,918	10,266
Expenses/(credit) not deductible for tax purposes	729	(148)	581	1,631
Movement on unrecognised deferred tax asset	2,407	32	2,439	1,105
(Credit)/charge in respect of rate change on deferred tax liability	(277)	4,833	4,556	-
Effect of overseas tax rates	21	-	21	20
Adjustment in respect of previous years	(173)	-	(173)	(1,612)
Release of tax provisions	-	-	-	-
Business combinations	621	3,274	3,895	-
Profit on disposal of properties	-	-	-	(1,310)
Share options	371	-	371	97
Movement in capital loss	(66)	-	(66)	-
Total tax charge for the year	(12,004)	4,304	(7,700)	3,111

9 Earnings per share
	2020	2019

a) Basic loss per share:
Weighted average ordinary shares for the purposes of basic earnings per share	562,652,429	490,904,049

Total loss for the year (£'000)	(119,888)	(40,406)

Basic loss per share for the year (pence)	(21.3)	(8.23)
Total loss for the year (£'000)	(119,888)	(40,406)
Effect of exceptional items on earnings for the year (£'000)	44,436	98,677
Loss excluding exceptional items (£'000)	(75,452)	58,271

Adjusted (loss)/earnings per share (pence)	(13.4)	11.9
b) Diluted (loss)/earnings per share:

Weighted average ordinary shares for the purposes of basic earnings per share	562,652,429	490,904,049
	562,652,429	490,904,049
Effect of dilutive potential ordinary shares:
Dilutive shares to be issued in respect of options granted under the share option schemes	84,176	505,478
	84,176	505,478

	562,736,605	491,409,527

Diluted loss per share (pence)	(21.3)	(8.2)
Adjusted diluted (loss)/earnings per share (pence)*	(13.4)	11.9

Diluted earnings per share information is based on adjusting the weighted average number of shares for the purpose of basic earnings per share in respect of notional share awards made to employees in regards of share option schemes and the share held by the employee benefit trust. The calculation of diluted earnings per share does not assume conversion, exercise or other issue of potential ordinary shares that would have an antidilutive effect on earnings per share.

* The adjusted diluted earnings per share for the 52 weeks ended 29 December 2019 has been re-presented to take account of a correction in the calculation of dilutive shares for that period. No other measures have been affected.

10 Intangible assets		Trademarks and	Franchise	Software and IT
	Goodwill	licences	agreements	development	Total
	£'000	£'000	£'000	£'000	£'000
Cost
At 31 December 2018	358,717	236,479	21,900	2,739	619,835
Additions	-	-	-	2,320	2,320
Amounts transferred to asset held for sale	(1,641)	(479)	-	-	(2,120)
Disposals	-	-	-	(223)	(223)
At 29 December 2019	357,076	236,000	21,900	4,836	619,812

Accumulated amortisation and impairment
At 31 December 2018	-	-	28	314	342
Charged during the year	-	10	1,460	1,119	2,589
Impairment	-	-	-	327	327
Amounts transferred to asset held for sale	-	(10)	-	-	(10)
Disposals	-	-	-	(223)	(223)
At 29 December 2019	-	-	1,488	1,537	3,025

Cost
At 30 December 2019	357,076	236,000	21,900	4,836	619,812
Additions	-	-	-	1,883	1,883
Disposals	(14,526)	-	-	(289)	(14,816)
Reclassifications	-	-	-	(1,063)	(1,063)
At 27 December 2020	342,550	236,000	21,900	5,367	605,817

Accumulated amortisation
At 30 December 2019	-	-	1,488	1,537	3,025
Charged during the year	-	-	1,460	1,066	2,526
Reclassifications	-	-	-	1,063	1,063
Impairment (note 6)	-	-	-	7	7
Impairment reversals (note 13)	-	-	-	(21)	(21)
Disposals	-	-	-	(277)	(277)
At 27 December 2020	-	-	2,948	3,376	6,324

Net book value as at 29 December 2019	357,076	236,000	20,412	3,299	616,787
Net book value as at 27 December 2020	342,550	236,000	18,952	1,991	599,493

During the period, the Group reclassified £1,063k of intangibles to equipment within property, plant and equipment that had a net book value of £nil.

Disposals during the period reflect goodwill attached to the Food & Fuel Limited business.

Goodwill and trademarks arising on business combinations are not amortised but are subject to an impairment review annually, or more frequently if events or changes in circumstances indicate that they might be impaired. Note 13 describes the impairment reviews conducted at the end of 2020, including also a description of the assumptions made and the sensitivity of impairment to those assumptions.

The recoverable amount of the goodwill and trademark CGUs is £1,589.0m (2019: £1,214.7m). The recoverable amount has been based on value in use estimates using forecasts approved by the Board. The projected cash flows have been discounted using a rate based on the Group's pre-tax weighted average cost of capital of 8.7% (2019: 8.9%) that reflects the risk of these assets. As the Group implemented IFRS 16 in the year, the discount rate fell by 3.8% due to the incorporation of lease liabilities in the WACC calculation. However, this was offset by a 3.6% increase due to an increased cost of equity and non-lease debt. Cash flows are extrapolated in perpetuity with an annual growth rate of 2-3% (2019: 2%). It was concluded that the value in use for each CGU is higher than its carrying value and therefore did not require impairment.

The carrying amount of goodwill and indefinite life intangible assets allocated to groups of CGUs is presented below along with the group of CGU's recoverable amounts. During the year the Group updated its policy for the measurement of impairment on indefinite life intangibles to incorporate assets expected to benefit from the synergies of the combination. This has had no impact on the outcome of the impairment assessment.

		Goodwill	Total intangibles	Recoverable Amount
	Trademarks & Licenses	Goodwill	Total intangibles	Recoverable Amount
	£'000	£'000	£'000	£'000
Wagamama	236,000	315,527	551,527	1,295,189
Brunning & Price	-	15,158	15,158	234,960
Blubeckers	-	11,275	11,275	55,612
Ribble Valley Inns	-	590	590	3,262
	236,000	342,550	578,550	1,589,023

The key assumptions used in the recoverable amount estimates are the discount rates applied and the forecast cash flows. The Group has conducted a sensitivity analysis taking into consideration the impact on key impairment test assumptions arising from a range of possible trading and economic scenarios as outlined in the stress case scenario at Note 1 as well as risk weightings applied to cash flows, discount rates used and terminal growth rates as outlined in Note 13. The sensitivity analysis show that no reasonably possible movements in these assumptions would lead to an impairment.

11 Right of use assets

Set out below are the right of use assets recognised in the Group's balance sheet and movements therein during the year. All assets relate to access to and use of property and there is, therefore, no analysis of assets into different classes of use.

	£'000
Right-of-use assets at 30 December 2019 (as restated for the adoption of IFRS 16 - see note 1)	819,499
Additions	17,961
Disposals	(167,821)
Depreciation	(73,527)
Remeasurements	(105,526)
Impairment of assets in closed sites (note 6)	(99,786)
Impairment of assets in trading sites (note 6)	(21,912)
Right-of-use assets at 27 December 2020	368,888

Within the depreciation of right-of-use assets above, £9.4m was capitalised into property, plant and equipment in respect of assets not yet ready for use in their intended purpose.

When indicators of impairment exist, right of use assets may be assessed for impairment. As described in note 13, all non-current assets were assessed at the end of 2020.

12 Property, plant and equipment		Fixtures,
	Land and	equipment
	buildings	and vehicles	Total
	£'000	£'000	£'000
Cost
At 31 December 2018	643,673	246,060	889,733
Additions	36,819	32,998	69,817
Disposals	(12,266)	(8,035)	(20,301)
Amounts transferred to assets held for sale	(20,608)	(5,651)	(26,259)
Foreign exchange differences	(323)	(73)	(396)
At 29 December 2019	647,295	265,299	912,594

Accumulated depreciation and impairment
At 31 December 2018	294,527	164,575	459,102
Provided during the year	21,023	22,038	43,061
Impairment	85,009	20,452	105,461
Disposals	(2,222)	(6,142)	(8,364)
Amounts transferred to Asset held for sale	(17,595)	(4,674)	(22,269)
Foreign exchange differences	(84)	(23)	(107)
At 29 December 2019	380,658	196,226	577,884

Cost
At 30 December 2019	647,295	265,299	912,594
Adjustment on transition to IFRS 16	(3,223)	-	(3,223)
At 30 December 2019 (Restated)	644,072	265,299	909,371
Additions	27,867	17,900	45,767
Disposals	(96,229)	(46,606)	(142,835)
Reclassifications	-	1,063	1,063
At 27 December 2020	575,710	237,656	813,366

Accumulated depreciation and impairment
At 30 December 2019	380,658	196,226	576,884
Adjustment on transition to IFRS 16	(1,291)	-	(1,291)
At 30 December 2019 (Restated)	379,367	196,226	575,593
Provided during the year	16,421	20,072	36,493
Impairment (note 6)	22,965	8,214	31,179
Impairment reversals (note 13)	(7,722)	(2,222)	(9,944)
Disposals	(81,679)	(42,827)	(124,506)
Reclassifications	-	(1,063)	(1,063)
At 27 December 2020	329,352	178,400	507,752
Net book value as at 29 December 2019	266,637	69,073	335,710
Net book value as at 27 December 2020	246,358	59,256	305,614

During the period, the Group reclassified £1,063k of intangibles to equipment within property, plant and equipment that had a net book value of £nil.

Property, plant and equipment additions of £45,767k includes capitalised right of use asset depreciation for sites under construction of £9,385k and a reduction in capital creditors of £1,004k. The purchase of property, plant and equipment disclosed in the cash flow statement excludes capitalised right of use depreciation.

The Group has carried out impairment testing of property, plant and equipment as described in note 13.

	2020	2019
Net book value of land and buildings:	£'000	£'000

Freehold	98,770	116,397
Long leasehold	3,690	3,128
Short leasehold	143,898	147,112
	246,358	266,637

13 Impairment reviews

The significant trading disruption in the period is judged to be an indicator of potential impairment of assets and, accordingly, the Directors have chosen to assess all non-financial assets for impairment in accordance with IAS 36.

Approach and assumptions

Our approach to impairment reviews is unchanged from that applied in previous periods and relies primarily upon "value in use" tests, although for freehold sites an independent estimate of market value by site has also been obtained and, where this is higher than the value in use, we rely on freehold values in our impairment reviews.

Discount rates as used in the value in use calculations are estimated with reference to our Group weighted average cost of capital. For 2020, we have applied the discount rate of 8.7% to all assets (2019: 8.9%), since in the opinion of the Directors all assets are currently subject to a comparable risk profile. As the Group implemented IFRS 16 in the year, the discount rate fell by 3.8% due to the incorporation of lease liabilities in the WACC calculation. However, this was offset by a 3.6% increase due to an increased cost of equity and non-lease debt.

For the current period, value in use estimates have been prepared on the basis of the "base case" forecast described above in Note 1 under the heading "Going concern basis". The most significant assumptions and estimates used in our impairment reviews are those contained within the base case forecast. Of these, the assumptions with the most significant impact on forecast site-by-site cash flows are those relating to revenue recovery and trends, where it is assumed that our businesses maintain a steady recovery in revenues, reaching 2019 levels by site and then growing at 2% per year, with pubs being the quickest to recover and concessions being the slowest. In addition to the forecast cash flows, a risk adjustment has been applied to these cash flows to reflect the uncertainty of future cash flows in the current environment.

Results of impairment review

Impairment has been recorded in a number of specific CGUs, reflecting weaker trading in certain areas following the Covid-19 pandemic. A total charge £152.8m (2019: £105.5m) was recognised of which £18.5m was recorded against Trading Property, Plant & Equipment ("PP&E") and a further £21.9m against right of use assets. This was offset by impairment reversals on property, plant and equipment of £10.0m caused by rent restructuring and changed post-Covid opening plans.

In addition, impairment of assets in closed sites amounted to £12.7m of property, plant and equipment and a further £99.8m of right of use assets.

No impairment was recorded against the Group's intangible assets (including goodwill).

Sensitivity to further impairment charges

The key assumptions used in the recoverable amount estimates are the forecast cash flows, risk adjustments applied to cash flows, discount rates and terminal growth rates. The Group has conducted a sensitivity analysis taking into consideration the impact on key impairment test assumptions arising from a range of possible trading and economic scenarios as outlined in the stress case scenario at Note 1 as well as the risk adjustment rates applied to cash flows, discount rates and terminal growth rates used.

The sensitivity analysis of forecast cash flows taking into account management's stress case scenario would give rise to an additional impairment of approximately £42.2m, made up of an increase in the impairment expense of £34.9m and a reduction in impairment reversals of £7.3m.

Doubling the risk adjustments applied to cash flows would give rise to an additional impairment of approximately £19.4m, made up of an increase in the impairment expense of £11.4m and a reduction in the impairment reversals of £8.0m. While halving the risk adjustments applied to cash flows would give rise to a reduction in impairment of £9.1m, made up of a £3.5m reduction in impairment expense and an increase in impairment reversals of £5.5m. The impact of doubling the risk adjustments is much greater than the impact of halving them as we have sensitised this assumption towards the downside risk due to the current trading conditions.

An increase in discount rate of 2% would give rise to an additional impairment of approximately £8.2m, made up of an increase in the impairment expense of £6.1m and a reduction in the impairment reversals of £2.1m. While a 2% decrease would give rise to a reduction in impairment of £6.5m, made up of a £4.4m reduction in impairment expense and an increase in impairment reversals of £2.1m.

A decrease in terminal growth rates of 1% would give rise to an additional impairment of approximately £2.0m, made up of an increase in the impairment expense of £1.3m and a reduction in the impairment reversals of £0.7m. While a 1% increase would give rise to a reduction in impairment of £1.6m, made up of a £1.1m reduction in impairment expense and an increase in impairment reversals of £0.5m.

14 Provisions
	2020	2019
	£'000	£'000
Property cost provisions*	11,322	48,862
Other provisions	1,283	4,031
Balance at the end of the year	12,605	52,893
Analysed as:
Amount due for settlement within one year	4,258	14,549
Amount due for settlement after one year	8,347	38,344
	12,605	52,893

	Property cost provisions*	Other	Total


	£'000	£'000	£'000

Balance at 29 December 2019	48,862	4,031	52,893
Adjustments made on implementation of IFRS 16	(44,566)	(1,814)	(46,380)
Balance at 30 December 2019	4,296	2,217	6,513
Remeasurement	7,481	(934)	6,547
Amounts utilised	(470)	-	(470)
Unwinding of discount	15	-	15

Balance at 27 December 2020	11,322	1,283	12,605

*Due to the transition to IFRS 16 for 2020, the liabilities for all leases, onerous and otherwise, are included in lease liabilities on the balance sheet. As part of the transition, the provisions categorised as property cost provisions (2019: Onerous contracts and other property provisions) were used to reduce the right of use asset as an impairment. Therefore the related onerous lease provision of £44.6m does not exist in 2020. The remaining balance relates to those elements of the onerous lease provision that are not related to lease payments, such as business rates. During 2019, onerous lease provisions were held for onerous contracts in respect of lease agreements. The provision comprised of the onerous element of expenditure over the life of those contracts and exit costs. Onerous lease provisions resulted in a charge of £7.5m in 2019.

15 Lease liabilities and net investments in subleases

The Group is both a lessee and lessor of property.

(a) Group as lessee

Set out below are the movements in the carrying amount of lease liabilities during the period. All leases relate to access to and use of property.

	2020
	£'000
At 30 December 2019	933,447
Additions	17,961
Finance charges	20,977
Cash payments made	(30,777)
Liabilities extinguished in disposals	(335,717)
Remeasurements	(122,103)
At 27 December 2020	483,788
Analysed as:
Amount due for settlement within one year	91,478
Amount due for settlement after one year	392,310
	483,788

In addition to the finance charges noted in the above table and depreciation on right of use assets, the Group also incurred £3.3m of costs relating to variable lease payments not included within the carrying amount of lease liabilities and £2.3m of costs relating to short term leases.

As at 27 December 2020, the Group was not committed to any leases with future cash outflows which had not yet commenced.

(b) Group as lessor

All income relates to fixed rental receipts. Movements in the net investment in lease assets included income of £0.2m and an expected credit loss provision of £2.9m. Income from leases classified as operating leases amounted to £0.9m.

Finance leases

Undiscounted lease receipts relating to finance leases for future years are set out in the table below.

Maturity analysis	2020
	£'000
Amounts receivable in the next year	788
Amounts receivable in 1-2 years	563
Amounts receivable in 2-3 years	389
Amounts receivable in 3-4 years	389
Amounts receivable in 4-5 years	371
Amounts receivable after 5 years from the balance sheet date	4,052
	6,552

The total in the table above is greater than the balance sheet amount due to the effects of discounting and provisions for expected credit losses. There is no undiscounted unguaranteed residual value within the amounts recognised.

Operating leases

	2020
	£'000
Amounts receivable in the next year	425
Amounts receivable in 1-2 years	336
Amounts receivable in 2-3 years	193
Amounts receivable in 3-4 years	133
Amounts receivable in 4-5 years	104
Amounts receivable after 5 years from the balance sheet date	750
	1,941

16 Reconciliation of profit before tax to cash generated from operations
	2020	2019
	£'000	£'000
(Loss)/Profit on ordinary activities before tax	(127,588)	(37,295)
Net interest charges	37,745	16,562
Exceptional items (note 6)	40,132	110,467
Share of result of associate	623	-
Share-based payments	2,016	576
Depreciation and amortisation	103,161	45,650
(Increase)/decrease in inventory	3,527	(596)
(Increase)/decrease in receivables	15,897	(261)
(Decrease)/increase in creditors	(72,297)	5,398

Cash generated from operations	3,216	140,501

17 Reconciliation of changes in cash to the movement in net debt	2020	2019
	£'000	£'000
Net debt:
At the beginning of the year	(286,628)	(291,132)
Adjustment for recognition of IFRS 16	(930,835)
Movements in the year:
Net repayment/(drawdown) of borrowings	(56,611)	32,000
Repayment/(drawdown) of overdraft	9,950	(9,950)
Upfront loan facility fee paid	(934)	-
Finance leases	-	170
Repayment of obligations under leases	30,777	-
Non-cash movements in the year	417,277	(1,594)
Net cash (outflow)/inflow	(9,046)	(16,122)

At the end of the year	(824,182)	(286,628)

Represented by:

	At 30 December 2018	Cash flow movements in the year	Non-Cash movements in the year	At 29 December 2019	Impact of transition to IFRS 16	Cash Flow movements in the year	Non-cash movements in the year	At 27 December 2020
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	65,903	(16,122)	(25)	49,756	-	(9,046)	14	40,724
Overdraft	-	(9,950)	-	(9,950)	-	9,950	-	-
Bank loans falling due after one year	(354,420)	32,000	(1,402)	(323,822)	-	(55,677)	(1,619)	(381,118)
Finance leases	(2,615)	170	(167)	(2,612)	2,612	-	-	-
Lease liabilities	-	-	-	-	(933,447)	30,777	418,882	(483,788)
	(291,132)	6,098	(1,594)	(286,628)	(930,835)	(23,996)	417,277	(824,182)

Cash and cash equivalents are comprised of cash at bank and cash floats held on site. The cash and cash equivalents balance includes credit card receipts that were cleared post year end.

The non-cash movements in bank loans are in relation to the de-recognition and remeasurement of lease liabilities, amortisation of prepaid facility costs and foreign exchange.

18 Long-term borrowings

	At 27 December 2020		At 29 December 2019
	Drawn	Facility	Drawn	Facility
	£'000	£'000	£'000	£'000
High yield bond	225,000	225,000	225,000	225,000
Revolving credit facilities	108,611	195,000	102,000	230,000
CLBILS	50,000	50,000	-	-
Total banking facilities	383,611	470,000	327,000	455,000
Unamortised loan fees	(2,493)		(3,178)
Long-term borrowings	381,118		323,822

Publication of Annual Report

This preliminary statement is not being posted to shareholders. The Annual Report will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company. Copies of the Annual Report will be available from the Company's website in March 2021.

Responsibility statement of the directors on the Annual Report

The responsibility statement below has been prepared in connection with the Group's full annual report for the year ended 27 December 2020. Certain parts of the annual report are not included within this announcement.

We confirm that, to the best of our knowledge

• the financial statements, prepared in accordance with the IFRSs as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

• the strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

On behalf of the Board

Andy Hornby Kirk Davis

Chief Executive Officer Chief Financial Officer

10 March 2021 10 March 2021

The directors believe the Adjusted Performance Metrics used within this report, and defined below, provide additional useful information for shareholders to evaluate and compare the performance of the business from period to period. These are also the KPIs used by the directors to assess performance of the business. The adjusted metrics are reconciled to the statutory results for the year on the face of the income statement and the relevant supporting notes.

Adjusted diluted EPS	Calculated by taking the profit after tax of the business pre-exceptional items divided by the weighted average number of shares in issue during the year, including the effect of dilutive potential ordinary shares.
Adjusted EBITDA	Earnings before interest, tax, depreciation, amortisation and exceptional items. Calculated by taking the Trading business operating profit and adding back depreciation and amortisation.
Adjusted EPS	Calculated by taking the profit after tax of the business pre-exceptional items divided by the weighted average number of shares in issue during the year.
Adjusted operating profit	Earnings before interest, tax and exceptional items.
Adjusted profit before tax	Calculated by taking the profit before tax of the business pre-exceptional items.
Adjusted tax	Calculated by taking the tax of the business pre-exceptional items.
EBITDA	Earnings before interest, tax, depreciation, amortisation and impairment.
Exceptional items	Those items that, by virtue of their unusual nature or size, warrant separate additional disclosure in the financial statements in order to fully understand the performance of the Group.
Free cash flow	EBITDA less working capital and non-cash movements (excluding exceptional items), tax payments, interest payments and maintenance capital expenditure.
Like-for-like sales	This measure provides an indicator of the underlying performance of our existing restaurants. There is no accounting standard or consistent definition of 'like-for-like sales' across the industry. Group like-for-like sales are calculated by comparing the performance of all mature sites in the current period versus the comparable period in the prior year. Sites that are closed, disposed or disrupted during a financial year are excluded from the like-for-like sales calculation.
Outlet EBITDA	Pre-IFRS 16 and Exceptional EBITDA directly attributable to individual sites and therefore excluding corporate and central costs.
Net debt	Net debt is calculated as the net of the long-term borrowings and finance lease obligations less cash and cash equivalents.
Trading business	Represents the performance of the business before exceptional items and is considered as the key metrics for shareholders to evaluate and compare the performance of the business from period to period.
TSR	Total Shareholder Return over a period.

[1] Ranges given in Leisure and Concessions estate as some sites still subject to negotiations with landlords and airport partners. Represents the total number of locations projected by the Group to be closed by 30 June 2021

[2] Expected retained estate

[3] Includes delivery kitchens

[4] In total, the Food & Fuel Limited estate comprised 11 sites, 4 of which we achieved agreement with landlords and the administrator to retain.

[5] In total, the Chiquito Limited comprised 63 sites, 18 of which we achieved agreement with landlords and the administrator to retain

[6] EBITDA assumed on leasehold basis at 6% interest on freehold component of investment

[7] Based on management calculations from passenger data sourced directly from airports

[8] Pre-Exceptional Charge

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