RNS Number:6578K
Giardino Group PLC
02 May 2003
GIARDINO GROUP PLC
PRELIMINARY RESULTS FOR THE 18 MONTHS
ENDED 31 JANUARY 2003
2 May 2003
Giardino Group Plc, which owns and operates a portfolio of 57 cafes and
restaurants presents the results for the eighteen months ended 31 January 2003.
Financial Highlights
Eighteen months to Twelve months to
31 January 2003 31 January 2003
* Turnover #39.2m #26.4m
* Gross profit #29.6m #20.0m
* Operating profit, before impairment provision, for the eighteen months period
was #4.0m and for the last twelve months #2.4m
* Number of trading outlets increased from 49 to 57 during the eighteen months
period
* Final dividend of 1.9p per ordinary share (2001: Final dividend equivalent:
0.9p) making a total for the 18 months of 4.4p (2001 12 months equivalent 1.5p
and 2002 12 months equivalent 2.5p)
* John Moxon, Chairman, said:
"Giardino Group continues to trade profitably and in a cash generative
manner"
"We are well placed to take advantage of opportunities which will arise in
the future"
For further information
Ron Sutcliffe
Financial Director
Giardino Group Plc
Tele: 020 8443 3968
CHAIRMAN'S STATEMENT
We are pleased to announce our audited results for the eighteen months ended 31
January 2003 following the decision to change our year end from 31 July.
Trading figures for the twelve months to 31 January 2003 are also shown for
comparative purposes.
Turnover for the twelve months ended 31 January 2003 was up 13.3% to #26.4m
(2001 - #23.3m) on the same period ending 31 January 2002. Turnover for the
eighteen months ended 31 January 2003 was #39.2m (twelve months to 31 July 2001
- #20.0m)
Gross profit for the twelve months ended 31 January 2003 reflected a similar
increase to #20.0m (2001 - #17.4m) thereby confirming the maintenance of our
margins. Gross profit for the eighteen months ended 31 January 2003 was #29.7m
(twelve months to 31 July 2001 - #15.0m).
Operating profit for the twelve months ended 31 January 2003, before impairment
provision and interest, was #2.4m and for the eighteen months period ended 31
January 2003 #4.0m (2001 - #2.9m).
The Board previously reported that it had carried out a rigorous review of the
Group's operations and concluded that while it was correct to develop both the
Giardino cafes and restaurants in tandem, greater care has to be taken over new
site selections in view of the tougher trading environment. At the same time we
intend to dispose of those sites which do not come up to expectations
I am pleased to report that this strategy has already started to bear fruit. At
the operating level, profits for the six months ended January 2003 were up by
10% on the comparable period ended January 2002. This improvement occurred in
both divisions but it was particularly seen in the established restaurant
division where there was a like for like revenue increase of 8%. The
comparable like for like figure of the Giardino cafes was 1%. These are
encouraging figures in light of the overall economic situation pertaining at the
time.
One reason for this is the greater management time being devoted to boosting
turnover through the existing outlets rather than spending time on new openings
It also reflects a relative improvement in the Company's competitive position
as the phase of aggressive expansion by the coffee shop chains appears to have
ceased. At the same time, it should also be noted that some progress has been
made in disposing of the seven outlets we have identified as no longer
satisfying the Company's criteria although given the poor trading backdrop the
disposal programme has been slow.
In July 2002 the Board reviewed the carrying value of the Group's portfolio and
in accordance with Financial Reporting Standard 11 - Impairment of Fixed Assets
and Goodwill, applied an impairment provision of #3.0m. No further provisions
have been made.
The Group adopted Financial Reporting Standard 19 - Deferred Tax which
represents a change in accounting policy. Comparative figures have been
adjusted accordingly.
The Directors are declaring a final dividend of 1.90p per Ordinary Share (2001 -
final dividend 0.90p). Total dividend for the eighteen months period is 4.4p.
It is the Company's intention to maintain a positive dividend policy. Future
dividends will be reviewed in light of the cash requirements of the business.
GROUP PORTFOLIO
During the last eighteen months the Group has increased its total number of
outlets from 49 to 57 operating units. During this time 11 new units have been
opened and one unit, the Auberge in Sevenoaks, has been closed. 2 units, the
Giardino Cafe in The Peacock Centre in Woking, and the Azzurro Restaurant in
Norwich have both been absorbed into larger Auberge Restaurants. As a result
profitability at both of these units has improved.
CAFE GIARDINO DIVISION
GIARDINO
The cafe division continues to generate 65% of the Company's profits and remains
extremely popular with its customers. There are still many opportunities for
the further development of the brand in out of town and regional shopping
centres as well as in town centres. Whilst our opening programme has slowed
down, we are examining a number of opportunities to expand the portfolio in the
future.
Over the last eighteen months we have increased the number of Cafe Giardino by
20% from 33 to 40, comprising 8 new openings and one effective closure. Some of
these units are situated in locations which have not proved capable of achieving
operational criteria. Appropriate action has been taken to effect improvements
and reductions in cost where possible. A number of units are currently being
considered for disposal.
PELLINI
The Pellini coffee shops in Dudley and Crawley continue to trade well.
Opportunities to expand the concept are being considered.
RESTAURANT DIVISION
During the last eighteen months reported we have opened 3 new restaurants. In
addition the Auberge restaurant in Woking has been enlarged by absorbing the
Giardino cafe situated adjacent. In Norwich the Auberge Restaurant has also
integrated the Azzurro operation to form a single unit. Both changes have
resulted in improved profitability. The Auberge at Sevenoaks was closed as this
unit did not meet the Company's criteria. The three restaurants purchased in
mid 2001 from the Whitbread Group have now all been successfully absorbed into
the Group and are trading in line with expectations. The Carpaccio restaurant
at Highgate is trading satisfactorily whilst the new Azzurro Restaurant in
Glasshouse Street in London has yet to make an impact.
OUTLOOK
The Giardino Group continues to trade profitably and in a cash generative
manner. The Giardino brand continues to be attractive to consumers in shopping
centres. The Board are confident that opportunities will enable the further
development of the brand and the continued growth in outlets if at a more
measured pace.
The Restaurant Division, which has grown substantially since flotation, will
continue to make a growing contribution to the Company's profits. This is
despite substantial competition in London, which has been particularly hit by
the drop in the numbers of tourists visiting the capital. Opportunities for
expansion may be limited over the next twelve months but this could coincide
with a reduction in competition in the High Street.
We have ended the year in a cash positive situation and are well placed to take
advantage of opportunities which will arise in the future. In the meantime the
Company will focus on improving quality of service and presentation. We will
also have the opportunity to review both costs and training standards to
maximise the benefit for both customers and shareholders.
Once again on behalf of my fellow Directors I would like to thank the management
team and staff of the Company who continue to be the backbone of the success
attributable to the Group.
John Moxon
Non-executive Chairman
2 May 2003
FINANCIAL REVIEW
Results
The Company changed its financial year end from 31 July to 31 January and as a
result is now reporting an eighteen month accounting period ending 31 January
2003. Financial data has been produced to cover the twelve months to 31
January 2003 together with comparative figures for the twelve months ended 31
January 2002.
Turnover in the twelve months ended 31 January 2003 was up 13.3% to #26.4m (2002
- #23.3m). Gross profit improved by 14.5% to #20.0m (2002 - #17.4m)
reflecting a continuing increase in the Company's margins. Operating profit
before impairment provision and interest was #2.4m (2002 - #2.9m). The
reduction in operating profit is largely attributable to the low turnover levels
achieved in a number of the more recently opened operating units.
Impairment
As previously reported, the Company has reviewed its portfolio of operating
outlets in accordance with Financial Reporting Standard 11 - Impairment of Fixed
Assets and Goodwill and as a result has applied an impairment provision
totalling almost #3.0m. against the carrying value of the outlets. Although
this amount has to be offset against current profits there is no effect on the
Group's cash position. The Group will benefit from a reduced depreciation
charge in the future as a result of this action.
Taxation
The Company has adopted FRS19 - Deferred Tax and accordingly the twelve months
to 31 July 2001 has been restated. As a result the Company has provided for a
deferred tax liability which is unlikely to become payable in the near future.
The effects of FRS11 regarding impairment and the introduction of FRS19 have
resulted in an abnormally high tax rate for the year of 86.4%. It should be
noted that the effective tax rate prior to impairment and FRS19 is 21.1% (2001 -
15.7%) and before impairment, but after FRS19, 33.8% (2001 - 29.4%).
Shareholders Funds
There were no changes in issued share capital during the year. The Profit and
Loss Account reflected a reduction of #0.8m largely due to the increase in
dividends and the application of FRS11 of almost #3.0m.
Cash Flow
Operating cash flows of #5.5m were generated in the eighteen months to 31
January 2003. #3.7m was expended on new operating units, #0.3m on interest
payable and #0.6m on tax. At the end of the period cash at bank had increased
by #0.2m. The company continues to be a substantial cash generator.
Ron Sutcliffe
Financial Director
2 May 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE 18 MONTHS ENDED 31 JANUARY 2003
Eighteen Eighteen Eighteen Twelve
months to months to months to months to
31 January 31 January 31 January 31 July
2003 2003 2003 2001
(Restated)
Before
Impairment Impairment
Provision Provision Total
#'000 #'000 #'000 #'000
Turnover 39,234 - 39,234 20,041
Cost of sales 9,577 - 9,577 5,088
_______ _______ _______ _______
Gross profit 29,657 - 29,657 14,953
Administrative expenses 25,648 2,991 28,639 12,038
_______ _______ _______ _______
Operating profit 4,009 (2,991) 1,018 2,915
_______ _______
Interest receivable 16 140
Interest payable and similar charges (312) (121)
_______ _______
Profit on ordinary activities before
taxation 722 2,934
Taxation on profit from ordinary activities (624) (861)
_______ _______
Profit on ordinary activities after
taxation 98 2,073
Dividends (898) (306)
_______ _______
Retained (loss)/profit for the period (800) 1,767
_______ _______
Earnings per share
- basic 0.48p 10.16p
- diluted 0.48p 10.01p
_______ _______
Adjusted earnings per share
- basic 12.04p 10.16p
- diluted 11.99p 10.01p
_______ _______
All amounts relate to continuing activities
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE 12 MONTHS ENDED 31 JANUARY 2003
Twelve Twelve Twelve Twelve months
months to months to months to to
31 January 31 January 31 January 31 January
2003 2003 2003 2002
(Unaudited)
Before
Impairment Impairment
Provision Provision Total
#'000 #'000 #'000 #'000
Turnover 26,437 - 26,437 23,268
Cost of sales 6,460 - 6,460 5,820
_______ _______ _______ _______
Gross profit 19,977 - 19,977 17,448
Administrative expenses 17,562 2,991 20,553 14,552
_______ _______ _______ _______
Operating (loss)/profit 2,415 (2,991) (576) 2,896
_______ _______
Interest receivable 9 40
Interest payable and similar charges (212) (158)
_______ _______
(Loss)/profit on ordinary activities
before taxation (779) 2,778
Taxation on (loss)/profit from ordinary (147) (811)
activities _______ _______
(Loss)/profit on ordinary activities after
taxation (926) 1,967
Dividends (776) (306)
_______ _______
Retained (loss)/profit for the period (1,702) 1,661
_______ _______
(Loss)/earnings per share
- basic (4.54p) 9.64p
- diluted (4.54p) 9.59p
_______ _______
Adjusted earnings per share
- basic 7.02p 9.64p
- diluted 7.02p 9.59p
_______ _______
All amounts relate to continuing activities
CONSOLIDATED BALANCE SHEET AT 31 JANUARY 2003
31 January 31 July
2003 2001
(Restated)
#'000 #'000
Fixed assets
Tangible assets 10,543 11,631
Current assets
Stocks 362 354
Debtors 1,301 666
Cash at bank and in hand 604 383
________ ________
2,267 1,403
Creditors: amounts falling due within one year 4,006 3,051
________ ________
Net current liabilities (1,739) (1,648)
________ ________
Total assets less current liabilities 8,804 9,983
Creditors: amounts falling due after more than one year 263 483
Provision for liabilities and charges 664 823
________ ________
7,877 8,677
________ ________
Capital and reserves
Called up share capital 4,080 4,080
Share premium reserve 746 746
Merger reserve (7) (7)
Profit and loss account 3,058 3,858
________ ________
Shareholders' funds - equity 7,877 8,677
________ ________
CONSOLIDATED CASH FLOW STATEMENT FOR THE 18 MONTHS ENDED 31 JANUARY 2003
Eighteen months Twelve months Twelve
to to months to
31 January 2003 31 January 2003 31 July
2001
#'000 #'000 #'000
Net cash inflow from operating activities 5,508 3,156 4,015
________ ________ ________
Returns on investments and servicing of finance
Interest received 16 9 140
Interest paid (312) (212) (121)
________ ________ ________
Net cash (outflow)/inflow from returns on investment and
servicing of finance (296) (203) 19
________ ________ ________
Tax paid (596) (419) (841)
________ ________ ________
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (3,828) (1,706) (6,502)
Receipts from sales of tangible fixed assets 127 127 14
________ ________ ________
Net cash outflow from capital expenditure and
financial investment (3,701) (1,579) (6,488)
________ ________ ________
Equity dividends paid (694) (510) (153)
________ ________ ________
Net cash inflow/(outflow) before use of liquid resources
and financing 221 445 (3,448)
Management of liquid resources - - 3,000
________ ________ ________
Net cash inflow/(outflow) before financing 221 445 (448)
________ ________ ________
Financing
Decrease in finance leases - (10) (21)
________ ________ ________
Net cash outflow from financing - (10) (21)
________ ________ ________
Increase/(decrease) in cash 221 435 (469)
________ ________ ________
1. Accounting Policies
During the period, the Group has adopted Financial Reporting Standard 19
(FRS19), "Deferred Taxation". The impact of FRS19 is the requirement to make
full provision for liabilities or assets which arise as a consequence of timing
differences between the treatment of certain items for taxation and accounting
purposes. The previous accounting policy was to recognise those liabilities or
assets only to the extent that it was probable that they would crystallise.
The effect of this accounting policy change has been to increase the
comparative tax charge and reduce profit after tax for the twelve months ended
31 July 2001 by #400,000. Had the accounting policy remained the same, the
taxation charge in the current period would have increased by #159,000 and
profit after tax for the current period would have been #159,000 lower. The
deferred tax provision of #664,000 and #823,000 in the current period and
previous year respectively would not have been recognised in the balance sheet
under the previous accounting policy.
Otherwise, the results for the eighteen months ended 31 January 2003
have been prepared on a consistent basis and using the same accounting policies
as those adopted in the financial statements for the year ended 31 July 2001.
2. Taxation
Eighteen Twelve Twelve
months to months to months to
31 January 31 January 31 July
2003 2003 2001
(Restated)
#'000 #'000 #'000
Current Tax
Corporation tax on the profits of the period 815 487 526
Adjustment in respect of previous periods (32) (32) (65)
________ ________ ________
783 455 461
Deferred tax
Origination and reversal of timing differences (159) (308) 400
________ ________ ________
624 147 861
________ ________ ________
3. Dividends
Eighteen Twelve Twelve
months to months to months to
31 January 31 January 31 July
2003 2003 2001
#'000 #'000 #'000
Ordinary dividends
First Interim dividend paid of 0.60p (2001 - 0.60p per share) 122 - 122
Second Interim dividend paid of 1.90p (2001 - Nil) 388 388 -
Final dividend proposed of 1.90p (2001 - 0.90p per share) 388 388 184
________ ________ ________
898 776 306
________ ________ ________
4. Earnings Per Share
Basic, diluted and adjusted earnings per share have been calculated on
the following bases:
Eighteen Twelve Twelve
months to months to months to
31 January 31 January 31 July
2003 2003 2001
(Restated)
#'000 #'000 #'000
Profit/(loss) on ordinary activities after taxation 98 (926) 2,073
Impairment provision (net of tax of #632,000) 2,359 2,359 -
________ ________ ________
Profit before impairment after taxation 2,457 1,433 2,073
_________ _________ ________
Number Number Number
Average ordinary shares in issue for basic earnings per share 20,399,400 20,399,400 20,399,400
Dilutive shares in respect of share options 95,432 - 302,237
Ordinary shares and dilutive shares for diluted earnings per
share 20,494,832 20,399,400 20,701,367
_________ _________ ________
Adjusted basic and diluted earnings per share has been calculated after
adding back the effect of the impairment provision after tax.
5. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
Eighteen Twelve Twelve
months to months to months to
31 January 31 January 31 July
2003 2003 2001
#'000 #'000 #'000
Operating profit/(loss) 1,018 (576) 2,915
Depreciation 1,839 1,237 798
Impairment provision 2,991 2,991 -
(Increase)/decrease in stocks (8) 66 (87)
Increase in debtors (635) (222) (276)
Increase/(decrease) in creditors 294 (349) 629
Loss on disposal of fixed assets 9 9 36
________ ________ ________
Net cash inflow from operating activities 5,508 3,156 4,015
________ ________ ________
6. Reconciliation of Net Cash Flow to Movement in Net Debt
Eighteen Twelve Twelve
months to months to months to
31 January 31 January 31 July
2003 2003 2001
#'000 #'000 #'000
Increase/(decrease) in cash in the period 221 435 (469)
Cash outflow from decrease in lease financing - 10 21
Decrease in liquid resources - - (3,000)
________ ________ ________
Change in net funds resulting from cash flows 221 445 (3448)
Net funds at 1 August 2001 383 159 3,831
________ ________ ________
Net funds at 31 January 2003 604 604 383
________ ________ ________
7. Analysis of Changes in Net Funds
At Cash flows At
1 August 2001 #'000 31 January 2003
#'000 #'000
Cash in hand and at bank 383 221 604
________ ________ ________
8. Financial Information
This statement does not constitute a full financial statement of the
Company's affairs for the eighteen months ended 31 January 2003. The auditors
have reported on the full accounts for the said period and have accompanied them
with an unqualified report. The accounts have yet to be delivered to the
Registrar of Companies. The Annual Report and Accounts will be posted to
shareholders on 7 May 2003 and the Annual General Meeting of the Company will be
held on 29 May 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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