Richoux Group Regulatory News (RIC)

22 Sep 2006 07:01

Gourmet Holdings PLC22 September 2006 Gourmet Holdings plcPreliminary results for the 52 weeks ended 25 June 2006 Strategic review Board changes 52 weeks ended 52 weeks ended 25 June 2006 26 June 2005 £m £m Turnover 10.24 9.75Gross profit 0.89 1.03Operating (loss)/profit before trading exceptional items (0.02) 0.42(Loss)/profit before taxation (1.47) 0.28 Key points: Results • Strong growth and good cash generation at Richoux • Disappointing trading at pub restaurant operation • Cash of over £3 million at period end • Net gearing of 34% Strategic review • Sale process of pub restaurant operation underway • Focus on the expansion of Richoux • Restructuring of the Board Nigel Whittaker, Chairman of Gourmet Holdings plc said: "Following a strategic review the Company will focus on a single brand, Richoux,and will be run on a lower cost base to deliver a more sustainable, morepredictable earning stream for shareholders" Enquiries: Gourmet Holdings plcNigel Whittaker (020) 7457 2020 College HillMatthew Smallwood (020) 7457 2020Justine Warren Introduction Following the announcement on 31 March 2006 of Gourmet's interim results to 8January 2006, trading at the Group's outlets continued to be mixed. In thesecond half Richoux delivered a strong, cash generative performance, but overalltrading at our Bel & the Dragon sites and our non-branded pub restaurants wasdisappointing. Against this background, in June 2006 the Board of Gourmet put in place astrategic review of the Group, taking into account its market position, itsstrengths, weaknesses and opportunities. The Board has concluded that, as a small company, Gourmet should simplify itsbusiness and focus upon one restaurant 'offer' which has proven appeal and theprospect of a successful roll-out. The Board believes that the Richoux brand,offering all day dining with good food and service, in an attractive setting,represents a good opportunity for expansion. Going forward, therefore, the Boardexpects the development of the Richoux operation to be the principal focus ofGourmet. As a result of the conclusions of the strategic review the Board has put inplace a sale process for the Group's entire pub restaurant operation. Thisprocess commenced formally in early September, following a number of unsolicitedapproaches received during the Summer in respect of this operation. Shareholderswill be kept advised of progress. The Board of Gourmet has also concluded that, in view of the decision tosimplify the business of the Group and to reduce its administrative cost base,it is appropriate to alter the Board's composition. The position of ChiefExecutive of the Company will not continue and, as a result, Gareth Lloyd-Joneswill leave the Company. Andrew Guy, Gourmet's Managing Director, will assumesole executive responsibility as of today. The Board would like to express itsthanks to Gareth for his contribution to the Group, and wishes him well for thefuture. Mark Horrocks, who has been a non-executive director of the Company since 1998,has informed the Board that he will not stand for re-election as a director ofthe Company at its forthcoming Annual General Meeting. As previously announced,Simon Broakes resigned as a director of the Company on 1 June 2006. The Boardthanks both Mark and Simon for their contributions to the Group. Finally, at the end of 2005 I advised the Board of my intention to stand down asChairman of the Company in the course of this year in view of my other businesscommitments. Now that the strategic review is complete, I am today standing downas Chairman and handing over this role to my non-executive colleague RichardScott. In the short term, Richard will in particular focus upon the disposalprocess referred to above. I will remain a non-executive director of Gourmet. Going forward, therefore, the Board of Gourmet will comprise one executivedirector and two non-executive directors. The Board believes this composition tobe more appropriate for a company of the size and structure of Gourmet. Results Group turnover from our operations for the 52-week period ended 25 June 2006increased to £10.24 million (2005: £9.75 million). Gross profit from therestaurants was £0.89 million (2005: £1.03 million). Administrative expenseswere £0.82 million (2005: £0.61 million). Operating loss before trading exceptional items was £23,000 (2005: profit£421,000); this result is largely a reflection of poor trading in the Group'snon-branded pub restaurants and an increase in overheads. Trading exceptionalitems in the year amounted to £1.2 million (2005: £nil). In our interim statement to 8 January 2006 we made reference to theunderperformance of two particular pub restaurants and their consequent transferout of the Group's continuing operations. Despite extensive negotiations thistransfer did not complete, and as a result the Board has resolved to terminatethis process; this has given rise to a bad debt provision of £325,000 in the2006 accounts. These properties are included in the pub restaurant sale process. Trading exceptional items in 2006 also comprised £450,000 impairment provisionin respect of the tangible fixed assets of a poorly performing site, £335,000for reorganisation costs and £59,000 for professional and other costs in respectof a potential site which has not been taken forward. The Directors are not recommending the payment of a dividend. Operations Richoux At the half year we noted that the Richoux business suffered a difficultbeginning of the period due to the impact of the London bombings in July 2005,which adversely impacted top line sales during that time. It is thereforepleasing to report that, despite this impact, Richoux had a successful year,recording a substantial increase in profit at restaurant operating level. Richoux's resilient performance was helped by the successful implementation of anumber of operational efficiency measures. Richoux is a flexible brand and the Board believes that it can operatesuccessfully in locations other than Central London. The Board considers thatRichoux, with its casual dining 'offer' concentrating on good food and attentiveservice, should flourish in a wider variety of locations. We believe the Richoux model offers good prospects for roll-out, and continue tolook actively to expand the number of Richoux restaurants we operate, utilisingthe funds raised from the placing last year. Pub restaurants Overall, the performance of the Group's pub restaurant operation in the year wasdisappointing, although all of our Bel & the Dragon restaurants remainedprofitable at the operating level. The pub restaurant operation was particularlyimpacted by losses of £275,000 at two non-branded sites. As described above, the Board has resolved to seek buyers for the whole of theGroup's pub restaurant operation. Outlook Following the strategic review the Company has a clear path. Our principalpriorities are to dispose successfully of the pub restaurant operation and tofocus on Richoux, where we believe there are attractive growth opportunities. Gourmet's streamlined Board is well placed to respond quickly and effectively toopportunities to develop its business. The Board is firmly focused on deliveringand maximising value for shareholders. Gourmet Holdings plcPreliminary results for the 52 weeks ended 25 June 2006 Gourmet Holdings plcConsolidated profit and loss accountFor the 52 week period ended 25 June 2006 52 week 52 week period ended period ended 25 June 2006 26 June2005 Notes Continuing Discontinued Total Acquisition Continuing Discontinued Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 9,887 353 10,240 4,713 5,036 - 9,749Cost of sales:Excludingpre-opening costs (8,997) (351) (9,348) (4,096) (4,537) - (8,633)Pre-opening costs 4 - - - (74) (10) - (84) (8,997) (351) (9,348) (4,170) (4,547) - (8,717) Gross profit 890 2 892 543 489 - 1,032Administrativeexpenses:Administrative (818) - (818) - (608) - (608)expensesAmortisation (97) - (97) (61) (19) - (80) (915) - (915) (61) (627) - (688) Other operating 5 - - - - 77 - 77income Operating (loss)/profit beforetrading (25) 2 (23) 482 (61) - 421exceptional itemsTrading 6 (1,169) - (1,169) - - - -exceptional items Operating (loss)/profit aftertrading (1,194) 2 (1,192) 482 (61) - 421exceptional itemsNet loss ondisposal of fixedassets (3) (12) (15) (4) - - (4)Profit on sale ofdiscontinuedoperation - - - - - 100 100 (Loss)/profit onordinaryactivities before (1,197) (10) (1,207) 478 (61) 100 517interestInterest 73 75receivableInterest payableand similarcharges (338) (312)(Loss)/profit onordinaryactivities before (1,472) 280taxationTaxation on (loss)/profit onordinary - -activities(Loss)/profit forthe financialperiod (1,472) 280(Loss)/earningsper share 8 (5.3)p 1.4pDiluted (loss)/earnings per share 8 (5.3)p 1.4p There are no differences between the historical cost profit and that recorded inthe profit and loss account (2005: £nil). Gourmet Holdings plcConsolidated balance sheetat 25 June 2006 25 June 2006 26 June 2005 Note (Restated) £'000 £'000 £'000 £'000 Fixed assets Intangible assets 2,101 1,439Tangible assets 11,820 8,987 13,921 10,426Current assets Stocks 210 198Debtors 601 570Cash at bank and in hand 3,010 1,125 3,821 1,893Creditors: amounts falling due within one year (2,842) (3,343) Net current assets/(liabilities) 979 (1,450) Total assets less current liabilities 14,900 8,976Creditors: amounts falling due after more than oneyear (5,789) (3,739) Net assets 9,111 5,237 Capital and reserves Equity Share capital 1,368 789Share premium account 12 8,763 11,815Warrants reserve 50 50Profit and loss account (1,070) (7,417) Shareholders' funds 9,111 5,237 Gourmet Holdings plcConsolidated cash flow statementfor the 52 week period ended 25 June 2006 Note 52 week 52 week period period ended ended 25 June 26 June 2006 2005 £'000 £'000 Net cash (outflow)/inflow from operating activities 13 (91) 350Returns on investments and servicing of finance (289) (178)Capital expenditure and financial investment (517) (1,510)Acquisitions and disposals (2,874) 131 Cash outflow before financing (3,771) (1,207)Financing 5,656 (167) Increase/(decrease) in cash in the period 1,885 (1,374) Reconciliation of net cash flow to movement in net debtFor the 52 week period ended 25 June 2006 52 week 52 week period period ended ended 25 June 26 June 2006 2005 £'000 £'000 Increase/(decrease) in cash in the period 1,885 (1,374)Cash (inflow)/outflow from changes in debt and lease financing (1,398) 167 Change in net funds resulting from cash flows 487 (1,207)New finance leases - (4)Loans and finance leases acquired with subsidiary undertakings (750) - Movement in net debt in the period (263) (1,211)Net debt at the start of the period (2,816) (1,605) Net debt at the end of the period (3,079) (2,816) Gourmet Holdings plcConsolidated statement of total recognised gains and lossesfor the 52 week period ended 25 June 2006 52 week 52 week period period ended ended 25 June 26 June Note 2006 2005 £'000 £'000 (Loss)/profit for the financial period (1,472) 280Gain on redemption of preference shares 408 -Reduction in share premium 12 7,411 - Total recognised gains and losses relating to thefinancial period 6,347 280 Reconciliation of movement in shareholders' fundsfor the 52 week period ended 25 June 2006 52 week 52 week period period ended ended 25 June 26 June 2006 2005 (Restated) £'000 £'000 (Loss)/profit for the financial period (1,472) 280New share capital subscribed (net of issue costs) 4,938 -Redemption of preference shares 408 - Net increase in shareholders' funds 3,874 280Opening shareholders' funds 5,237 4,957 Closing shareholders' funds 9,111 5,237 Notes 1. There have been no changes to the main accounting policies used by the Group over the period. 2. The financial information set out above does not constitute the Company's statutory accounts for the years ended 26 June 2005 or 25 June 2006 but it is derived from those accounts. Statutory accounts for 26 June 2005 have been delivered to the Registrar of Companies and those for 25 June 2006 will be delivered following the Company's Annual General Meeting. The auditors have yet to report on those accounts but their work is substantially complete and it is anticipated that their audit report will be unqualified and will not contain statements under section 237 (2) or (3) of the Companies Act 1985. 3. The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings made up to 25 June 2006. The results of all subsidiary undertakings are consolidated. Intra-group sales are fully eliminated on consolidation. 4. Pre-opening costs Property rentals and related costs together with promotional and training costs incurred up to the date of the opening of a new or refurbished restaurant are written off to the profit and loss account in the year in which they are incurred. 5. Other operating income All other operating income represents franchise fees received net of all associated costs and charges. 6. Trading exceptional items The trading exceptional charge of £1,169,000 comprises £450,000 impairment provision in respect of tangible fixed assets of a poorly performing site, £335,000 for reorganisation costs, £325,000 bad debt provision in respect of non completion of the business transfer, and £59,000 for professional and other costs in respect of a potential site. 7. Discontinued operations On the 28 January 2006 the Company sold its bakery, Barons Patisserie, and closed its outside catering business, Capital Cuisine. 8. (Loss)/earnings per share The (loss)/earnings per share is calculated by reference to the profit or loss after taxation and the weighted average number of ordinary shares in issue during the period of 27,784,505 (2005 restated: 19,726,073). The (loss)/earnings per share for both the basic and fully diluted (loss)/ earnings per share is calculated on the basis of a loss for the period of £1,472,000 (2005 profit: £280,000). The diluted (loss)/earnings per share is calculated by reference to the profit or loss after taxation and the weighted average number of ordinary shares and share options in issue during the period of 27,889,358 (2005 restated: 20,081,871). Share options and warrants not included in the diluted calculations as per the requirements of FRS14 (as they are anti-dilutive) totalled 721,522 (2005 restated: 712,006). 9. No dividend is proposed. 10. Acquisition of BDR Holdings Limited On the 12 December 2005 the Company acquired the entire share capital of BDR Holdings Limited and its subsidiary BDR Restaurants Limited. The fair value of the consideration given for the share capital was: Book value before Fair value Fair value at date acquisition adjustments of acquisition £'000 £'000 £'000 Tangible fixed assets 2,066 1,134 3,200Stock 34 - 34Debtors 16 - 16Cash and overdrafts (50) - (50)Liabilities (385) - (385)Bank loans (750) - (750) Net assets 931 1,134 2,065Goodwill 759 2,824Satisfied by:Cash 2,716Acquisition costs 108 Fair value of consideration 2,824 12. Reconciliation of movement in share premium account Share premium account £'000At 26 June 2005 11,815Reduction in share premium* (7,411)New share capital subscribed 4,628New share capital issue costs (269)At 25 June 2006 8,763 \* The reduction in the share premium account was confirmed by an Order of theHigh Court of Justice, Chancery Division on the 18 January 2006 and registeredpursuant to section 138 of the Companies Act 1985 on the 20 January 2006. 13. Reconciliation of operating (loss)/profit to operating cash flows 52 week 52 week period period ended ended 25 June 2006 26 June 2005 £'000 £'000 Operating (loss)/profit (1,192) 421Depreciation charge 419 359Amortisation charge 97 80Impairment of tangible fixed assets 450 -Decrease/(increase) in stocks 22 (40)(Increase)/decrease in debtors (15) 169Increase/(decrease) in creditors 128 (639) Net cash (outflow)/inflow from operating activities (91) 350 This information is provided by RNS The company news service from the London Stock Exchange