The Restaurant Group plc

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

Response to Oasis letter to TRG

INTRODUCTION:

The Board of TRG notes the letter issued by Oasis Management Company Ltd ("Oasis") on 16 February 2023. The Board welcomes constructive input from all shareholders that is supportive of the creation and delivery of long-term sustainable shareholder value.

The Board is issuing this announcement to give context to the matters raised by Oasis in the letter.

1.    OASIS'S PROPOSAL FOR GOVERNANCE REVIEW

The Board of TRG notes Oasis's request for a review of "all options for meaningful governance change".

Whilst Oasis states "they have been engaging with TRG for several years", our Chairman met Oasis face-to-face for the first time in December 2022.

At this meeting, Oasis requested a seat on the TRG Board and a strategic review to be conducted by an "independent bank".  This request was made without Oasis giving indication of strategic ideas that should be examined by the Board.  

The Board was already, and continues to, review the Group's strategic options. The Board concluded that this review should not be disrupted by Oasis' suggestion of an additional process.

The Board therefore decided it would not be in the interest of our other shareholders to grant Oasis a Board seat.

2.    OASIS'S SHAREHOLDING HISTORY

Oasis have used various financial instruments to hold exposure to TRG stock, which makes it difficult to establish full disclosure of their holding history.  Based on statements from Oasis and regular share register analyses, it appears that:

·    Oasis disclosed a holding of c.2% of TRG stock in November 2020

·    Oasis then exited their holding

·    Oasis re-entered at some point in the first half of 2022 with a holding of c.2%

·    Oasis notified TRG of an increase to c.5% in November 2022

·    Oasis's letter published today states they now own c.6.5%

·    Their trading history contrasts with a number of our major shareholders, many of whom have been consistent long-term holders

3.    THE GROUP'S OPERATING PERFORMANCE HAS BEEN RESILIENT

The COVID global health pandemic and the current cost-of-living crisis have created huge challenges for the UK Hospitality industry and this has been reflected in TRG's share price. However swift and decisive management actions taken during COVID were viewed as having successfully guided TRG through an extremely challenging period.  

The operational performance of TRG since COVID has also been strong when compared to the wider UK Casual Dining sector (the majority of which is privately owned):

·    Wagamama has continued to trade extremely well over the past three years as indicated by its consistent market outperformance on sales and leading customer ratings

·    Our Pubs business ("Brunning & Price") has delivered exceptional market out-performance on sales and consistently strong customer ratings

·    Our Leisure business has been carefully restructured to maximise cashflow

·    Our Concessions business has been successfully re-sized and is well placed to benefit from strong earnings growth as air travel continues to recover in 2023 and 2024

In addition to this resilient operating performance, TRG announced in December 2022 a long-term debt re-financing for the next four years with flexible covenant arrangements and the ability to make further repayments as appropriate.  This is hugely important in a casual dining sector where debt financing has proved difficult to achieve since COVID.

CONCLUSION

·    The TRG Board always welcomes constructive dialogue with our shareholders and will continue to engage with Oasis along with our entire shareholder base with the common goal of delivering shareholder value

·    The Board continues to examine options to ensure that the strength of the Group's operating performance generates shareholder value

·    TRG looks forward to announcing our full year results on 8 March 2023. This will provide an opportunity to update shareholders on 2022 results, current trading and our medium-term strategy

·    TRG's management team will be meeting with our major shareholders following the results in March and our Chairman will be offering major shareholders the usual opportunity to meet prior to our AGM in May

Enquiries:

Notes:

1.   The Restaurant Group plc operates approximately 410 restaurants and pub restaurants throughout the UK as at 16 February 2023. 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 seven 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" statements and reflect the Group's current expectations concerning future events.  Actual results may differ materially from current expectations or historical results.

3.   The Group's next scheduled update is the full-year results announcement on 8 March 2023.