Companies: RTN   

The Restaurant Group, formerly known as City Centre Restaurants, may have lost the battle for pizza and pasta chain ASK but it has still managed to serve up another respectable set of results. For 2003, the operator of Caffe Uno, Garfunkel's, Frankie and Benny's, Chiquito and Est Est Est, increased pre-tax profits before exceptional items by 15% to £19.3m and turnover to £227m (£216m). Exceptional items of £2.6m included £1.2m in costs for the aborted acquisition of ASK. During the year, the company saw overall like-for-like sales increase 3%, with its strongest brand Frankie and Benny's, which opened 11 new restaurants, experiencing like-for-like sales up 7%. Concentrating on growth in leisure parks and concessions business has worked well for the group as that turnover increased 13%. However its high street restaurants suffered a 1% fall in turnover and some of the Est Est Est venues are still underperforming. Current net debt has been reduced from £44.6m to £25m and a £13.4m placing in January will be used to fund the continued roll-out of its concepts. A new five-year £70m revolving credit facility has been secured. Like-for-like sales for the 11 weeks to March are up 2%. Broker Arbuthnot has recommended the stock as a strong buy and expects pre-tax profits to climb to £21.5m in 2004. Buy.