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Fri 4th Mar 2016 - Casual Dining Group set to deliver £50m Ebitda after transformational year
Casual Dining Group set to deliver £50m Ebitda after transformational year: Casual Dining Group (CDG), the operator of 302 mid-market restaurant sites, has reported it is set to deliver run-rate Ebitda of £50m by May 2016 after a transformational year. It has also posted accounts for its financial year from 2 June 2014 to 31 May 2015 – a period of rapid reorganisation and change, which has laid the foundations for the current progress of the company. Highlights from the 12 months to 31 May 2015 include: a successful restructure of the group, with debt lowered to £91m; the sale of Strada and divestment from other non-core assets; investment of £21m in existing and new restaurant locations; sales of £215m and Ebitda of £24.4m from continuing operations; expansion onto leisure and retail parks for “next generation” Bella Italia; the start of a transformation programme for Café Rouge; and Las Iguanas and La Tasca acquired for combined £108m post year-end. Chief executive Steve Richards said: “While these numbers are firmly historic and do not reflect the company’s current size, profitability or growth trajectory, they nevertheless reflect a period when the foundations of CDG were laid. It was a period of transformation, which saw the creation of a new restaurant group, with a new identity, and dramatically altered balance sheet, structure and prospects. What was set in place in this period positioned the group on a growth path that will see it produce £50m of run-rate Ebitda by May (2016).” Of the year to 31 May 2015, the company stated: “At the beginning of this financial period – back in 2014 – the group undertook a detailed strategic review. As a result, the group elected to dispose of non-core restaurants operating within the Bella Italia and Café Rouge businesses, and to explore options for a sale of the Strada restaurants. This work began with Company Voluntary Arrangements (CVAs) for the Bella Italia and Café Rouge operations, which were approved in June 2014, and was completed with the successful sale of Strada in October 2014. As a result, at the year-end on 31 May 2015, the group comprised 197 restaurants, of which 192 were considered core to the business, compared to 293 sites on the 1 June 2014 – a reduction in core restaurants of 101. As a result of the restructure, net assets increased by £117m and third party borrowings were reduced to £91m, transforming the group’s balance sheet. The year (to 31 May 2015) also marked the start of a period of significant investment for the group, during which £9.8m was invested in 11 new sites. A further £11m was invested refurbishing 43 existing restaurants across the Bella Italia (23) and Café Rouge (20) portfolio. The level of brand investment and new site openings accelerated immediately after the financial year-end in question and has continued. Led by managing director Nick White, Bella Italia launched in a number of new leisure and retail park locations. This was driven by strong demand from commercial landlords and developers for the brand’s refreshed format, featuring contemporary design and a new menu built on fresh and affordable Italian cuisine. The brand is in significant growth and delivering all key financial and customer metrics. During the period, the group recruited a new managing director and brand director for its Café Rouge French bistro brand, with James Spragg and Georgia Hall joining to lead its rejuvenation. This work, which touched every facet of the Café Rouge operation, has continued through to the current year (to 31 May 2016), and is delivering long-term and sustained sales uplifts. The brand is in growth and performing well against all key financial and customer metrics. The group is on track to complete the refurbishment programme of the entire Bella Italia and Café Rouge restaurant portfolio by the end of the current financial year – to 31 May 2016. As of 1 March 2016, the group operated 97 Bella Italia restaurants and 90 Café Rouge café-bistros. New openings will mean by the year-end to 31 May 2016, the group will operate 302 UK restaurants, with run-rate Ebitda projected to reach £50m, with sales well in excess of £300m. In contrast, during the period to 31 May 2015, turnover from continuing operations was £215.7m and Ebitda generated was £24.3m – a number impacted by temporary closures associated with the refurbishment programme described above. Figures for continuing operations also included a number of restaurants deemed non-core and identified for disposal (some of which were loss-making) but that were nevertheless part of the group at the start of the financial period commencing 2 June 2014. Some of these sites were sold individually but many were exited by the group via the CVA process. At a pre-tax level, after £35m of predominately non-cash adjustments and exceptional items – as a result of the restructuring – the group made a loss of £16.5m for the period. The year to 31 May 2015 was a year of transformation for the group. The financial and operational restructuring of the group set in place a platform for significant growth, allowing the group to invest in both existing restaurants and the creation of new locations for its key growth brands. On the 3 March 2015, a new name was announced – Casual Dining Group – to reflect a period of enormous change and to draw a line under the previous, very different, business from which CDG was hewn. After the year-end the group was able to take advantage of strategic opportunities in the UK restaurant market, acquiring the Las Iguanas and La Tasca businesses, adding a total of 82 restaurants to the group, for a total consideration of £108m. In Las Iguanas, we have acquired an exceptional business that performs impressively on a wide variety of financial and customer metrics, and have been delighted by the performance of the new sites opened under our ownership. The brand is also flexible in terms of unit size and location, with the ability to trade in town centres and in mixed-use leisure and retail developments. Like CDG’s other key growth brands, we are of the firm belief that Las Iguanas can expand internationally, and are actively exploring opportunities with potential strategic partners in Asia and the Middle East. In La Tasca, we have acquired a business at a different stage of the business cycle, and while we plan to convert a number of sites to our other brands, there is a core of high-performing (and highly profitable) restaurants that we continue to review and evaluate. Since the year-end we have continued to invest in opening new restaurants. In the current financial year to 31 May 2016, we will open approximately 30 restaurants and we expect to open a similar number in the following financial year. By end of the current period (to May 2016), CDG will operate 302 restaurants. We will continue to build on the strategy set in place in the financial period described above by investing in our people, in our brands and in our restaurant properties.”


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