Interim Results
November 30 2004 - 11:16AM
UK Regulatory
RNS Number:8372F
Bakery Services PLC
30 November 2004
BAKERY SERVICES PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2004
CHAIRMAN 'S STATEMENT
Highlights
*Following store closures and resulting cost reductions, the Group is
likely to remain cash generative.
*Operating loss before exceptional items #70,871 (2003 - #3,227 profit)
*Cash outflows from operating activities before working capital changes
#20,133 (2003 - #50,409 inflows).
*Don Miller's Eating Experience pilot store closed.
Overview
On August 21 2004 the Company opened a new pilot store for the trading concept
Miller's Eating Experience. As indicated in previous reports, your Board
considered that the success or otherwise of this store was likely to become
apparent within a short time after the opening date.
Some weeks after trading commenced, your Board took the view that sales had not
achieved a level sufficient to support the long-term viability of this project
as a potential franchise opportunity.
Being mindful of the limited financial resources available to the Group, your
Board reluctantly concluded that it was in shareholders best interests to close
this pilot store and eliminate on-going related costs. The closure was announced
on 19 October 2004 and is likely to result in a net reduction in annual costs of
some #100,000
Inbake's in-store concession business performed satisfactorily during the period
and reported a significant improvement in margins. A further 'host store'
closure has resulted in a write down of asset values amounting to #26,724.
The Don Millers' franchise business also performed to expectations although
company managed stores in the estate (which includes the unit in respect of
which there is a legal claim as set out below) performed poorly. The anticipated
closure of one managed unit, due to the expiry of the lease which the Company
has decided not to renew, has resulted in an asset impairment write down of
#31,366 and the repossession of another franchised store has resulted in a
further asset write down of #14,804.
At this stage no provision has been made in respect of the closure of the Don
Miller Eating Experience unit since the Directors anticipate this may be sold.
The carrying value of assets attributable to this unit is #194,894.
The legal claim against the company's former lawyers in relation to the
acquisition of Don Miller's Limited in March 2000 continues. No substantive
progress has been made during the period although terms relating to possible
mediation continue to be negotiated.
Review of Operations
Bakery Division - Inbake(R)
Inbake Limited currently operates 11 in-store bakeries trading from concession
sites in large United Kingdom based supermarkets. Most Inbake stores now trade
under the Don Miller's brand name.
Trading over the last six months has been in line with your Directors
expectations and reflects the successful and profitable management of Inbake's
gradually contracting business.
The results are as follows:
Unaudited 6 Unaudited 6
months months
ending 30:09:04 ending 30:09:03
#000s' #000's
Sales 1,434 1,557
Gross Margins %age 39.2% 35.5%
Operating profit before exceptional
items 150 186
Franchise Division -Don Millers (R)
As at the date of this report, Don Millers Limited had 7 retail bakery and
sandwich cafe franchises operating in high street and shopping centre locations,
predominantly in the midlands and north of England. In addition Don Millers also
operates 2 managed units.
After allowing for the changes in the franchised estate, trading over the last
six months has been broadly in line with your Directors expectations in respect
of the franchised unit but below expectations in respect of the managed units.
The results are as follows:
Unaudited 6 Unaudited 6
months months
ending 30:09:04 ending 30:09:03
#000's #000's
Franchise income 96 96
Managed store sales 189 296
Total 285 392
Operating profit franchise 59 42
Operating profit / (loss) managed
stores (91) (12)
- -
Total before exceptional items (32) 30
Losses for the Managed stores are broken down as follows:
Victoria Centre #19,610 - this store is subject to the legal claim covered above
Loughborough #16,310 - repossessed from the existing franchisee and due to close
at the end of March 2005
Temple Row #55,070 - Millers Eating Experience losses to date.
Summary of Financial Results
Group turnover for the period was #1,729,336 (2003 - #1,954,181). Group losses
after taxation and exceptional items were #148,372 (2003 - #3,398 profit).
Taxation in the current and prior year comparative period was nil.
Net cash outflows from operating activities before working capital changes were
#20,133 (2003 - #50,409 inflow). Inflows from operating activities were #580
(2003 #59,346)
Cash balances at 30 September 2004 were #4,089 (2003 - # 404,875). The Group has
overdraft facilities in place amounting to #200,000.
On October 12 2004 the Group raised #105,000 (before expenses) through a placing
of 35,000,000 shares at 0.3p per share.
Basic and fully diluted losses per share were 0.1054p (2003 - 0.0024p)
Outlook
The failure of the Don Miller Eating experience test site has been a great
disappointment to your Board. However the Board has taken prompt action to
secure the financial position of the Group and is now embarking on a strategic
review of how to enhance shareholder value going forward.
Clearly the outcome of the legal claim as described above is a major factor for
the Group going forward and every effort is being made to bring this matter to a
successful conclusion.
In the meantime the focus remains:
* development of Don Millers existing franchise business
* managing the contraction of the Inbake business to ensure it remains
profitable and cash generative.
Richard D. Worthington
Non-Executive Chairman and Financial Director
30 November 2004
CONSOLIDATED PROFIT AND LOSS
ACCOUNT
Unaudited six months Audited
ended 30 September 31 March
Total Total Total
2004 2003 2004
Note #'000 #'000 #'000
Turnover 1,729 1,954 3,629
Cost of Sales (978) (1,191) (2,166)
------- ------- -------
Gross Profit 751 763 1,463
Gross Margin 43.4% 39.0% 40.3%
Distribution costs (182) (224) (436)
Administrative expenses (640) (536) (1,086)
------- ------- -------
Operating profit (71) 3 (59)
Provision for
impairment of fixed
assets 5 (73) - -
Net interest (payable)
/ receivable (4) - 1
------- ------- -------
Profit / (loss) on
ordinary activities
before taxation (148) 3 (58)
Taxation 3 - - -
------- ------- -------
Profit/(loss) on
ordinary activities
after taxation (148) 3 (58)
------- ------- -------
Retained profit/(loss)
for the period (148) 3 (58)
======= ======= =======
Earnings/(loss) per
share 4
- Basic (0.1054) p 0.0024 p (0.0400 p)
- Fully diluted (0.1054) p 0.0024 p (0.0400 p)
======= ======= =======
CONSOLIDATED BALANCE SHEET
Unaudited six months Audited
ended 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
Fixed assets
- Tangible assets 5 432 354 347
------- ------- -------
432 354 347
Current assets
- Stocks 130 116 132
- Debtors 259 392 374
- Cash at bank and in hand 4 405 232
------- ------- -------
393 913 738
Creditors: amounts falling due
within one year (500) (782) (651)
Net Current
assets/(liabilities) (107) 131 87
Total assets less current
liabilities 325 485 434
Creditors: amounts falling due
after more than one year (64) (15) (25)
------- ------- -------
Net assets 261 470 409
======= ======= =======
Capital and reserves
- Called up share capital 141 141 141
- Share premium 2,569 2,569 2,569
- Profit and loss account (2,449) (2,240) (2,301)
------- ------- -------
Shareholders' funds - all
equity 261 470 409
======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
Unaudited six months Audited
ended 30 September 31 March
2004 2003 2004
#'000 #'000 #'000
Net cash inflow/(outflow) from
operating activities 1 59 (253)
Returns on investments and servicing
of finance (5) - 1
Taxation - - -
Capital expenditure (145) 207 184
------- ------- -------
(149) 266 (68)
Equity dividends paid - - -
------- ------- -------
(149) 266 (68)
Financing (12) (8) (20)
------- ------- -------
(161) 258 (88)
======= ======= =======
Reconciliation of net cash flow to movement in net funds
/ (debt)
Increase / (decrease) in cash in the
period (161) 258 (88)
Decrease in debt and lease financing 12 8 20
New finance leases (64) (15) (38)
------- ------- -------
Change in net funds/(debt) (213) 251 (106)
Net funds/(debt) at start of period (10) 96 96
------- ------- -------
Net funds at end of period (223) 347 (10)
======= ======= =======
Notes
1. Publication of Non-Statutory Accounts
The financial information contained in this interim statement has not been
audited and does not constitute accounts as defined by section 240 of the
Companies Act 1985. The financial information for the full preceding year
is based on the statutory accounts for the year ended 31 March 2004. Those
accounts, upon which the Auditors issued an unqualified opinion have been
delivered to the Registrar of Companies.
2. Basis of Preparation of Interim Financial Information
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year
ended 31 March 2004.
3 Taxation
The Directors believe that tax losses brought forward will result in no tax
charge for the period.
4 Earnings per Share
The calculation of earnings per share is based on the profit or loss after
tax for the financial period divided by the weighted average number of
ordinary shares in issue during the period. The weighted average number of
ordinary shares in issue for the periods reported were as follows:
Unaudited six months Audited
ended 30 September 31 March
2004 2003 2004
Basic:
Weighted average number of 140,833,3333 140,833,333 140,833,333
ordinary
shares in issue
Fully diluted:
Weighted average number of 140,833,333 140,833,333 140,833,333
ordinary
shares in issue
5 Impairment of fixed assets
Provision has been made amounting to #72,894 against the impairment of plant
and equipment at sites which have closed, are expected to close before the
end of the financial year or where cashflows generated by the assets are
expected to be negative.
The balance sheet at 30 September 2004 includes fixed assets with a carrying
value of #194,894 relating to a retail unit which the Board was considering
closing permanently due to unsatisfactory trading.
The decision to close the store was reached on 19 October 2004. No provision
has been made in respect of this closure since the Directors anticipate the
store may be sold. If these assets were to become impaired and were fully
written down, an additional profit and loss charge of #194,894 would result.
6 Copies of the interim statement
Copies of the interim statement will be sent to shareholders. Further copies
will be available from Smith & Williamson Corporate Finance Limited, No 1
Riding House Street, London, W1A 3AS.
7 Copies of this Announcement
Copies of this announcement will be available from the nominated adviser,
Smith & Williamson Corporate Finance Limited, No 1 Riding House Street,
London W1A 3AS, free of charge, for one month from the date of this
announcement and on the Company's website, www.bakeryservices.co.uk, in due
course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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