NOT FOR RELEASE, PUBLICATION AND DISTRIBUTION IN THE U.S.A., AUSTRALIA, CANADA OR JAPAN
PRESS RELEASE
ROSINTER RESTAURANTS INCREASED CONSOLIDATED REVENUE BY 10% IN 2018
Moscow, April 29, 2019: Rosinter Restaurants Holding PJSC (Rosinter or Rosinter Restaurants or the
Company) is one of the major operators in the casual dining restaurant segment in Russia (MICEX-RTS: ticker ROST) announces its operating and financial performance for 2018, in accordance with IFRS.
FINANCIAL AND OPERATING HIGHLIGHTS IN 2018
∙Consolidated revenues increased by 9.9%, amounted to RUB 7,651 mln in 2018.
∙Consolidated gross operating revenues [1] increased by 8.8% in 2018 compared to 2017 and amounted to RUB 8,367 mln. The revenues growth related to the aggressive strategy to open new locations and exit from non-profitable assets, which the Company implemented in 2018.
∙Rosinter Restaurants opened 35 new restaurants, including 21 corporate and 14 franchising locations.
∙Gross revenues of comparable restaurants[2] amounted to RUB 5,764 mln in 2018, that increased by 4.6% compared to 2017. The increase of the indicator was due to 2.9% growth in transactions and 1.6% average check increase.
∙The franchising network extension pushed up the franchising revenues by 17.4% compared to 2017.
∙EBITDA before impairment and write-offs[3] amounted to RUB 481 mln in 2018, increased by 19.1% compared to RUB 404 mln in 2017. EBITDA margin amounted to 6.3% in 2018.
∙The Company's large-scale investment program in 2018 drove up the restaurant opening expenses to RUB 151 mln (increased by 123.4% in compared to 2017) and resulted in the net loss for the year in amount of RUB 83 mln.
CONSOLIDATED GROSS OPERATING REVENUE PERFORMANCE [1] (RUB mln)
Total | Same-store sales growth [2] | |||||||
2018 | 2017 | % change | 2018 | 2017 | % change | |||
8,367 | 7,690 | 8,8% | 5,764 | 5,513 | 4,6% | |||
KEY OPERATING INDICATORS OF COMPARABLE RESTAURANTS | ||||||||
Number of transactions | Average check, roubles | |||||||
2018 | 2017 | % change | 2018 | 2017 | % change | |||
6,426 | 6,243 | 2,9% | 897 | 883 | 1,6% | |||
1
NOT FOR RELEASE, PUBLICATION AND DISTRIBUTION IN THE U.S.A., AUSTRALIA, CANADA OR JAPAN
Sergey Zaitsev, CEO, Rosinter Restaurants Holding PJSC:
"Results of 2018 indicated the stable trends of Rosinter revenues growth. This is connected with consistent implementation of the Company's strategy aimed at increasing efficiency and stripping off non-profitable assets in 2016/2017. Further connected with intensive development of the network under its key restaurant brands and the start of operatinal growth in 2018.
At the end of 2018, Rosinter's portfolio rose to 272 restaurants (2017: 259 restaurants). As a result of the large-scale investment program, the Company launched 35 new restaurants, including 21 corporate locations, 14 franchising location. The Company's systemic revenue[4] rose by 8.6%, to RUB 10,422 mln, of which 26.6% were accounted for franchising partners' income.
The main development of corporate locations accounted on transport hubs. The Company introduced its brand portfolio in the new terminal B at the Sheremetyevo International Airport, Domodedovo and Vnukovo international airports, Moskovsky railway station in St. Petersburg. We boosted not only have the number of restaurants but also completely updated the AmBar and Mama Russia chains concepts, which were specifically developed for transport hubs. City restaurants were also actively updated. At the end of year 2018 the number of updated restaurants in the overall chain exceeded 60%, and for Rosinter's key brand - IL Patio Italian restaurants this indicator is increase to 70%.
The challenging macro-economic environment, low consumer demand and high competition in the casual dining segment required us to maximize efforts and enhance business efficiency looking for additional profit growth drivers. The cost-cutting efforts, food cost operating along with menu updates, service quality improvement, catering and Honored Guest loyalty program development allowed us to generate profit for comparable restaurants.
After the period of intensive corporate network growth our goal for 2019 is to develop franchising and increase EBITDA by improving the current efficiency of the business model. The Company will be focusing on the following objectives:
−development of the delivery system;
−financial efficiency maximization of the new locations in transport hubs opened in 2018;
−Honored Guest loyalty program development and usage of customized approach in marketing communications;
−implementation of a number of personnel management programs that are intended to increase the principles of financial incentives for the restaurants' management depending on performance in specific locations;
−development and implementation of IT solutions that should become the platform for the Company's operational activities».
2
NOT FOR RELEASE, PUBLICATION AND DISTRIBUTION IN THE U.S.A., AUSTRALIA, CANADA OR JAPAN
Income statement
% Change | p.p. | |||||||||
(RUB) thousands | 12M 2018 | 12M 2017 | change, Y-o- | |||||||
Y-o-Y | ||||||||||
Y | ||||||||||
Net revenue | 7,650,799 | 100.0 % | 6,962,213 | 100.0 % | 9.9 % | - | ||||
Incl. Revenue from restaurants | 7,368,526 | 96.3 % | 6,713,752 | 96.4 % | 9.8 % | (0.1)% | ||||
Incl. Revenue from franchising | 211,385 | 2.8 % | 179,991 | 2.6 % | 17.4 % | 0.2 % | ||||
Cost of sales | 6,375,472 | 83.3 % | 5,789,194 | 83.2 % | 10.1 % | 0.1 % | ||||
Incl. Food and beverages | 1,628,377 | 21.3 % | 1,438,516 | 20.7 % | 13.2 % | 0.6 % | ||||
Incl. Payroll and related taxes | 1,449,434 | 18.9 % | 1,433,433 | 20.6 % | 1.1 % | (1.7)% | ||||
Incl. Rent | 1,982,658 | 25.9 % | 1,756,371 | 25.2 % | 12.9 % | 0.7 % | ||||
Gross profit | 1,275,327 | 16.7 % | 1,173,019 | 16.8 % | 8.7 % | (0.1)% | ||||
SG&A Expenses | 843,689 | 11.0 % | 928,380 | 13.3 % | (9.1)% | (2.3)% | ||||
Start-up expenses for restaurants | 150,724 | 2.0 % | 67,473 | 1.0 % | 123.4 % | 1.0 % | ||||
Other gains | 9,363 | 0.1 % | 68,222 | 1.0 % | (86.3)% | (0.9)% | ||||
Other losses | 102,530 | 1.3 % | 40,314 | 0.6 % | 154.3 % | 0.7 % | ||||
Incl. Loss on disposal of non-current assets | 62,413 | 0.8 % | 19,747 | 0.3 % | 216.1 % | 0.5 % | ||||
Profit from operating activities before impairment | 187,747 | 2.5% | 205,074 | 2.9 % | (8.4)% | (0.4)% | ||||
Loss from/(reversal of) impairment of operating assets | 20,807 | 0.3 % | (110,172) | (1.6)% | (118.9)% | 1.9 % | ||||
Profit from operating activities after impairment | 166,940 | 2.2 % | 315,246 | 4.5 % | (47.0)% | (2.3)% | ||||
Financial expenses, net | 288,871 | 3.8 % | 296,682 | 4.3 % | (2.6)% | (0.5)% | ||||
Foreign exchange gain, net | 1,121 | - | 1,782 | - | (37.1)% | 0.0% | ||||
(Loss)/profit before income tax | (120,810) | (1.6)% | 20,346 | 0.3 % | (693.8)% | (1.9)% | ||||
Income tax benefit/(expense) | 38,175 | 0.5 % | (12,219) | (0.2)% | (412.4)% | 0.7 % | ||||
Net (loss)/profit | (82,635) | (1.1)% | 8,127 | 0.1 % | (1116.8)% | (1.2)% | ||||
Profit from operating activities before impairment | 187,747 | 2.5% | 205,074 | 2.9 % | (8.4)% | (0.4)% | ||||
Depreciation and amortization | 230,890 | 3.0 % | 178,976 | 2.6 % | 29.0 % | 0.4 % | ||||
Loss on disposal of non-current assets | 62,413 | 0.8 % | 19,747 | 0.3 % | 216.1 % | 0.5 % | ||||
EBITDA before impairment and write-offs | 481,050 | 6.3 % | 403,797 | 5.8 % | 19.1 % | 0.5% |
Consolidated revenues amounted to RUB 7,651 mln in 2017, that increased by 9.9% compared to 2017. The restaurants' revenue increased by 4.6% compared to 2017. The trend of growth in restaurant revenue in 2018 was the result of an improvement in food and service quality, the increase in transactions by 2.9% and average check growth by 1.6%. Moreover, the revenue changes were triggered by exit from non-profitable locations (7.0% reduction) and by launch of new restaurants and updating the existing locations (11.9% growth) in 2018. All indicators were calculated as percentage of revenue.
Cost of sales was comparable to the level 2017: the indicator increased by 0.1%, increase in food cost (by 0.6%), rent cost growth (by 0.7%) were compensated by optimization in personnel costs (decreased by 1.7%). All indicators were calculated as percentage of revenue.
The food cost increase was largely caused by increase in food prices in the second half of 2018.* The lease costs increased due to the launch of new locations in 2018.
*The information is supported by the Russian Statistics Committee.
3
NOT FOR RELEASE, PUBLICATION AND DISTRIBUTION IN THE U.S.A., AUSTRALIA, CANADA OR JAPAN
Gross profit margin was equal to 16.7% in 2018 and stood almost at the level of 2017 - 16.8%, which was mainly due to the compensation of the effect from exit from non-profitable locations in 2017 by launching new locations in 2018.
Decreasing in selling, general and administrative costs by 9.1% related to implementing a campaign on cost reduction during the last years.
The start-upexpenses soared 123.4% compared to 2017. The significant growth in the restaurant opening costs in 2018 resulted from the earlier announced course for the intensive development of the restaurant chain under the key brands and the updating of the existing locations. In 2018, the Company opened 21 corporate locations, compared to 5 locations in 2017. The updated restaurants exceeded 60% in the Rosinter's portfolio at the end of 2018 and for the IL Patio key brand, they were 70%.
Other costs decreased by 86.3% due to the generation of the one-off income from writing off payables in 2017.
The loss from impairment of operating assets in 2018 amounted to RUB 21 mln compared to the reversal of loss from impairment of operating assets in 2017 in the amount of RUB 110 mln. The reversal of the impairment loss was the result of a change in the estimates used to determine the asset's recoverable amount in 2017.
The decrease of net financial expenses by RUB 8 mln (by 2.6% compared to 2017) was due to the decrease in borrowing costs.
Net loss in 2018 amounted to RUB 83 mln compared to RUB 8 mln net profit in 2017. The losses incurred in 2018 were related to the large-scale investment program implemented by the Company in 2018.
Alexey Shorohov, CFO, Rosinter Restaurants Holding PJSC:
"Generally, Rosinter's financial statements for 2018 suggest that the Company reached the operational growth. The net loss is caused by aggressive investment policy, which significantly raised the Company's presence in transport hubs and shopping centers of Moscow. Most restaurants were opened late in 2018, therefore we will witness the Company's positive financial results during 2019.
The principal objective that Rosinter faces is to reduce the debt burden and to align Debt/EBITDA ratio to the comfortable level. And whereas this indicator grew to 7.8 according to 2018 financial statements - as the result of the investment program, the normal Debt/EBITDA, not taking into account the impact of costs on the chain development in 2018, displays the reduction and approximates the level of 6.0, according to our estimates."
4
NOT FOR RELEASE, PUBLICATION AND DISTRIBUTION IN THE U.S.A., AUSTRALIA, CANADA OR JAPAN
Cash flow statement
(RUB) thousands | 12M 2018 | 12M 2017 | % Change | |||
Y-o-Y | ||||||
Net cash flow generated from/ (used in) operating activities | 381,530 | (415,794) | (191.8)% | |||
Incl. Cash flow before changes in operating assets and liabilities | 500,239 | 349,022 | 43.3 % | |||
Incl. Changes in operating assets and liabilities | 263,729 | (439,487) | (160.0)% | |||
Incl. Financial and tax cash outflow | (382,438) | (325,329) | 17.6 % | |||
Net cash flow used in investing activities | (1,229,159) | (670,053) | 83.4 % | |||
Net cash flow from financing activities | 842,455 | 1,127,377 | (25.3)% | |||
Effect of exchange rates on cash and cash equivalents | 1,183 | (2,575) | (145.9)% | |||
Net (decrease)/ increase in cash and cash equivalents | (3,991) | 38,955 | (110.2)% | |||
Cash & Cash equivalents at beginning of period | 152,376 | 113,421 | 34.3 % | |||
Cash & Cash equivalents at end of period | 148,385 | 152,376 | (2.6)% |
The operating cash flow amounted to RUB 382 mln in 2018 as a result of the increase in operating revenues and in payables.
Net investment cash outflow increased by 83.4% in 2018 compared to 2017, due to the Company's implementation of its plans to upgrade and expand the restaurant chain. The Company also implemented the program to upgrade the IT infrastructure (the project to create the commodity accounting system in restaurants was implemented; the BI system was introduced), thus laying the groundwork for further implementation of IT solutions that will enhance business efficiency.
Net financial cash inflow decreased by RUB 842 mln in 2018 compared to RUB 1,127 mln in 2017, at the expense of receipt of additional credit resources under new long-term loan agreements in 2017. The raised funds were applied for implementation of the strategic chain development and upgrading plan.
Loans and liquidity
(RUB) thousands | 12M 2018 | 12M 2017 | % Change | |||||
Y-o-Y | ||||||||
Total Gross Debt | 3,934,813 | 100.0 % | 3,091,071 | 100.0 % | 27.3 % | |||
Short-term | 982,978 | 25.0 % | 312,406 | 10.1 % | 214.6 % | |||
Long-term | 2,951,835 | 75.0 % | 2,778,665 | 89.9 % | 6.2 % | |||
Net Debt | 3,786,428 | 96.2 % | 2,938,695 | 95.1 % | 28.8 % | |||
Net Debt / EBITDA before impairment and write-offs | 7.8x | 7.2x | - |
The Company's gross debt amounted to RUB 3,935 mln as of December 31, 2018. The net debt soared 28.8% in 2018 compared to 2017. The debt portfolio is denominated in rubles and 75% of it is accounted for long-term borrowings.
5
This is an excerpt of the original content. To continue reading it, access the original document here.