Results to 2 July 2000
Belgo Group PLC
12 September 2000
12 September 2000
Belgo Group PLC
Preliminary Results for the 53 Weeks ended 2 July 2000
Belgo Group Plc, the leading restaurant group, which operates
the well-known brands of Belgo Bierodrome and Strada,
together with prestigious restaurants such as The Ivy, Le
Caprice, J Sheekey and Daphne's announces its preliminary
results for the 53 weeks ended 2 July 2000.
Highlights
- Group turnover up by 32% to £35.7m (1999: £27.09m)
- Profit before taxation and goodwill amortisation up by
33% to £4.8m (1999: £3.6m)
- 27% increase in Basic EPS (excluding goodwill
amortisation) to 0.355p (1999: 0.278p)
- Final dividend of 0.02p, making a total dividend for the
year of 0.03p (1999: 0.03p)
- Successful development and opening of a new roll-out
brand - 'Strada' - opening of Strada Battersea Rise,
Strada Parsons Green and Strada Exmouth Market
- Further expansion of the Belgo/Bierodrome division
through the opening of Bierodrome Clapham, Bierodrome
Clerkenwell and Bierodrome Fulham
- Three additional restaurants are currently under
construction - a Bierodrome in Holborn and Stradas in
Islington and the Regent Street area of London
NB:
In accordance with best practice the group has adopted the
recently released accounting pronouncement UITF Abstract 24
'Accounting for start-up costs' and accordingly pre-opening
costs are now written off as incurred. This change in
accounting policy has resulted in a prior year adjustment.
Andy Bassadone, Chief Executive commented:
'Although the London restaurant market has become more
competitive, strongly differentiated brands such as Belgo and
Strada are the key to continued growth. We currently have
three new units under construction and are well positioned to
continue our expansion with internally generated cash whilst
remaining debt free.'
Nick Fiddler, Finance Director commented:
'The last financial year was a period of consolidation. The
group is now more efficient and better controlled as
illustrated by our profit conversion rate which improved by
nearly 30% in the second half as against the first. Our
Strategy to invest in and expand our two principal brands,
Belgo Bierodrome and Strada, is clear and we are now in a
strong position to accelerate that process.'
For further information please contact:
Belgo Group PLC Tel: 020 7557 6333
Andy Bassadone, Chief Executive
Nick Fiddler, Finance Director
Citigate Dewe Rogerson Tel: 020 7638 9571
Simon Rigby / Kylie Child
Chairman's Statement
53 Weeks ended 2 July 2000
For the year ended 2 July 2000, the group reported sales of
£35.7 million, an increase of 32% over the preceding year.
Profit before taxation and goodwill amortisation rose by 33%
to £4.8 million. Basic earnings per share, before goodwill
amortisation, rose by 28% to 0.355p. The final dividend is
maintained at 0.02p per share to give an unchanged total of
0.03p per share for the year. The dividend is payable on 20
October 2000 to shareholders on the register on 22 September
2000. In accordance with best practice, we have adopted the
new accounting pronouncement UITF 24 which deals with the
treatment of pre-opening expenses, and have retrospectively
adjusted the 1999 results accordingly. This change in
accounting policy did not have a material effect on the
results for the period ended 2 July 2000.
The last financial year has been a challenging one. The
London restaurant market has become more competitive with an
increase in the number of new outlets. However, it is clear
that strongly differentiated brands, that satisfy the ever
more sophisticated and demanding guest, will prove to be
successful in the future. Belgo Group's restaurants satisfy
these criteria.
Over the past financial year Belgo outperformed the industry
as a whole in most categories, although there is still room
for improvement in our margins. With the benefit of hindsight
we were over-ambitious with certain openings in previous
years and with last year's budget. This year we have been
more cautious on both fronts.
After a year of consolidation our strategy is clear and we
are in a strong position to accelerate the organic expansion
of our two principal brands Belgo and Strada.
The group is now more efficient and better controlled. This
is illustrated by comparing the two halves of our last
financial year, where the second half profit before taxation
and goodwill amortisation was £2.8 million on £18.7million
sales as against £2million on £17 million sales for the first
half. This represents a 27% improvement in the profit
conversion rate. As we add more restaurants, our central
overhead should rise only marginally. This will allow us to
improve margins over time, by economies of scale. We can
fund new restaurant openings through cash flow, and have no
need to raise new capital or take on debt to execute our
plans.
Review of Operations
The expansion of the Belgo brand has continued. We now have
ten Belgo related operations with one currently under
construction. The four Bierodromes are in Islington,
Clapham, Fulham and Clerkenwell with a fifth under
construction in the Holborn area of London. The Bierodrome
concept is a well-differentiated brand that serves an
exceptionally wide range of Belgian beers and genuine Belgian
cuisine. Bierodrome offers a more exciting and distinctive
experience than many of the new bar-restaurants that are
springing up. The mix of our business has a much higher
proportion of diners than most gastro-pub concepts and I
believe there is a market for at least 25 Bierodromes in the
UK.
The original Belgo restaurants performed well, despite a
serious fire in the premises adjoining Belgo Centraal which
resulted in the restaurant being closed for some two months.
Our restaurants in New York and Dublin were both
disappointing, but trading has improved in recent months
under new local management. We are continuing to improve the
margins in the other new Belgo restaurants where overall
trading has been better in recent months.
Caprice Holdings, comprising The Ivy, Le Caprice and J
Sheekey, enjoyed a good year. All three restaurants saw
increased sales and profits and are unquestionably Britain's
premier trio of fine dining establishments. We are confident
this success will be maintained, under the long standing
strong operational management team trained and developed by
the highly talented Jeremy King and Chris Corbin, who remain
with this division as non-executive Directors.
The Signature division, comprising Daphne's, The Collection,
Bam-Bou and Pasha, made solid returns in the second half
after a disappointing first quarter. This is a cash-
generative, tightly controlled business. Such one-off, high-
class restaurants can make consistently impressive profits if
well run.
I outlined in the interim statement that the Group had opened
a new concept, 'Strada', which we believe to be a brand with
considerable roll-out potential that can be expanded
alongside the Belgo and Bierodrome brands. Strada offers
affordable high quality wood burning oven pizzas and pasta in
stylish surroundings. The initial enthusiasm by which the
first three have been received by customers and food critics
alike convinces us that there is clear demand and market
opportunity for a distinct premium pizza and pasta concept.
Strada, with its finest quality ingredients and strong
culinary base, offers by far the highest quality pizza and
pasta in its price range. The first opened in November 1999
and we now have Stradas in Battersea Rise, Parson's Green and
the Exmouth Market area of London with two more under
construction within London. All three units are performing
well and we envisage there is room for at least 50 across the
UK.
Prospects
The restaurant and bar business is still growing in Britain
and margins and cash returns can be exceptional with the
right formula. We believe the Belgo and Strada brands, which
are clearly differentiated, offer that right formula and we
remain confident about the future success of the Group. We
currently have 20 very high quality restaurants and bars that
are run by able and dedicated staff. We have three units
under construction and our strong financial position remains,
with £2.6m of cash, despite having funded a substantial
opening programme. Trading and profitability since the year
end is showing a material improvement over the comparable
period in 1999. The board believes that, with the expansion
of the Belgo and Strada brands, the group is well placed to
become one of the largest independent restaurant operators. I
would like to thank our people for all their hard work, and
our customers and shareholders for their support.
Luke Johnson
Chairman 12 September 2000
Consolidated Profit And Loss Account
53 weeks 52 weeks
ended ended
Notes 2 July 27 June
2000 1999
(unaudited) (unaudited)
(As
£'000 restated)
£'000
Turnover
Continuing 36,573 18,115
Acquisition - 9,511
Less share of joint (898) (536)
ventures (continuing)
______ ______
Group turnover 1 35,675 27,090
Cost of sales (10,056) (7,488)
______ ______
Gross profit 25,619 19,602
Administrative (21,303) (16,390)
expenses
Amortisation of 2 (734) (561)
goodwill
Group operating 5,050 3,773
profit excluding
goodwill amortisation
Group operating
profit
Continuing 4,316 2,385
Acquisition - 827
4,316 3,212
Share of joint 3 (196) (280)
venture operating
loss
______ ______
4,120 2,932
Net interest received 78 154
Share of joint (140) (39)
venture
interest payable
______ ______
Profit on ordinary 4,058 3,047
activities before
taxation
Taxation (1,156) (868)
______ ______
Profit on ordinary 2,902 2,179
activities after
taxation
Dividends - equity 5 (307) (307)
______ ______
Retained profit for 2,595 1,872
the period
______ ______
Earnings per ordinary 6 0.283p 0.221p
share - basic
- diluted 6 0.260p 0.197p
Earnings per ordinary
share excluding
goodwill amortisation
- basic 6 0.355p 0.278p
- diluted 6 0.326p 0.248p
Consolidated Balance Sheet
At 2 July 2000 At 27 June 1999
(unaudited) (unaudited)
Notes (As restated)
£'000 £'000 £'000 £'000
Fixed Assets
Intangible assets 2 13,160 14,129
Tangible assets 4 16,491 13,005
Investments
Joint ventures
Share of gross 3 1,330 1,250
assets 3 (1,900) (1,474)
Share of gross
liabilities
(570) (224)
Other investments 120 208
(450) (16)
______ ______
29,201 27,118
Current Assets
Stock 1,052 831
Debtors 2,448 1,906
Cash at bank and 7,098 7,364
in hand
______ ______
10,598 10,101
Creditors: amounts (12,611) (12,374)
falling due within
one year
______ ______
Net current (2,013) (2,273)
liabilities
______ ______
Total assets less 27,188 24,845
current liabilities
Creditors: amounts - (3)
falling due after
more than one year
Provision for - (288)
liabilities and
charges
______ ______
Net assets 27,188 24,554
______ ______
Capital and Reserves
Called up share 10,244 10,231
capital
Share premium 19,227 19,150
account
Merger reserve 162 162
Goodwill reduction 5,868 5,868
reserve
Profit and loss (8,313) (10,857)
account
______ ______
Equity shareholders' 7 27,188 24,554
funds
______ ______
Consolidated Cash Flow Statement
53 weeks 52 weeks
ended ended
Notes 2 July 27 June
2000 1999
(unaudited) (unaudited)
(As restated)
£'000 £'000 £'000 £'000
Net cash inflow 8 6,172 2,534
from operating
activities
Returns on
investments and
servicing of
finance
Interest received 315 476
Interest paid (10) (34)
Finance lease (2) (11)
interest
Loan note (225) (277)
interest
______ ______
78 154
Taxation
UK Corporation (89) (626)
tax
Capital
expenditure
and financial
investment
Purchase of (4,463) (6,690)
Tangible fixed
assets
Disposal proceeds 14 54
on sale of fixed
assets
______ ______
(4,449) (6,636)
Acquisitions and
disposals
Purchase of - (1,692)
subsidiaries
Equity dividends (307) (102)
paid
______ ______
Cash
inflow/(outflow) 1,405 (6,368)
before management
of liquid
resources and
financing
Management of
liquid resources
Decrease in bank 1,500 4,514
deposit accounts
Increase in - (6,000)
restricted
deposits
______ ______
1,500 (1,486)
Financing
Issue of ordinary - 8,468
share capital
Share issue costs - (230)
Repayment of (1,551) (898)
loans
Repayment of (47) (62)
finance leases
______ ______
Net cash (1,598) 7,278
(outflow)
/ inflow from
financing
______ ______
Increase/ 9 1,307 (576)
(decrease)
in cash in the
period
______ ______
Notes forming part of the financial statements
1. Group turnover arises substantially in the United
Kingdom. Turnover, results and net assets derive from the
Group's ongoing principal activity of operating restaurants.
The acquisition in the period ended 27 June 1999 related to
Caprice Holdings Limited, the principal business of which is
the operation of Le Caprice, The Ivy and J. Sheekey. The
total cost of sales and administrative expenses relating to
this acquisition amounted to £900,000 and £1,785,000
respectively.
2. Results are consolidated from the date of acquisition of
subsidiary undertakings. In accordance with FRS 10, goodwill
arising on the difference between the fair value of the
consideration paid and the fair value of the identifiable net
assets acquired is capitalised and amortised over 20 years
being the estimated useful economic life. Goodwill arising
prior to the implementation of FRS10 was written off directly
to reserves or, in the case of negative goodwill, credited to
a merger reserve. On subsequent disposal any such goodwill
will be charged to the profit and loss account.
3. In accordance with FRS 9 joint ventures are accounted for
using the gross equity method.
4. In accordance with the recent release of the accounting
pronouncement UITF Abstract 24 - 'Accounting for Start up
Costs', the Group now writes off pre-opening costs in the
year in which they are incurred. This change in accounting
policy has given rise to a prior year adjustment of £797,000
and accordingly the results for the year ended 27 July 1999
have been restated. The effect of the change in accounting
policy was not material to the results for the period to 2
July 2000.
5. Proposed final dividend represents 0.02p per ordinary
share to give a unchanged total dividend of 0.03p per share
(1999 - 0.03p).
6. The calculation of earnings per share is based on the
weighted average number of issued ordinary shares during the
period of 1,023,838,870 (1999 - 986,553,691) and earnings of
£2,902,000 being the result after taxation (1999 -
£2,179,000).
Diluted earnings per share includes 94,763,874 (1999
-117,223,987) shares in respect of options and warrants,
giving a total number of shares of 1,130,274,395 (1999 -
1,103,777,678). Earnings per share excluding the
amortisation of goodwill of £734,000 (1999 - £561,000) is
based on adjusted earnings of £3,636,000 (1999 -
£2,740,000).
7. The movement in shareholders' funds can be summarised as
follows:
As at As at
2 July 27 June
2000 1999
(unaudited) (unaudited)
(As restated)
£'000 £'000
Profit for the 2,902 2,179
financial period
Dividends (307) (307)
______ ______
2,595 1,872
New share capital 90 14,476
subscribed in period
Share issue expenses - (230)
Goodwill written off - (109)
Exchange differences (51) (22)
______ ______
2,634 15,987
Openings shareholders' 24,554 8,567
funds (originally
£25,351,000 before
deducting the prior
year adjustment of
£797,000)
______ ______
Closing shareholders' 27,188 24,554
funds
______ ______
8. Reconciliation of operating profit to net cash inflow
from operating activities
53 weeks 52 weeks
ended ended
2 July 2000 27 June 1999
(unaudited) (unaudited)
(As restated)
£'000 £'000
Operating profit 4,316 3,212
Depreciation charge 1,052 643
Amortisation of 734 561
goodwill
Profit on disposal - (103)
of fixed assets
Increase in stock (221) (421)
Increase in debtors (452) (579)
Increase / (decrease) 743 (779)
in creditors
_____ ______
Net cash inflow from 6,172 2,534
operating activities
______ ______
9. Reconciliation of net cash inflow to movement in net
funds
53 weeks 52 weeks
ended ended
2 July 2000 27 June 1999
(unaudited) (unaudited)
£'000 £'000
Increase/(decrease) 1,307 (576)
in cash in the
period
Cash outflow from 1,598 960
decrease in debt
and lease
financing
(Decrease) / Increase (1,500) 1,486
in cash deposits
_____ ______
Increase in net 1,405 1,870
funds resulting
from cash flows
Loans/finance - (962)
leases acquired
with subsidiary
Loan notes issued - (6,000)
_____ _____
Movement in net 1,405 (5,092)
funds in the period
Opening net funds 1,161 6,253
_____ _____
Closing net funds 2,566 1,161
______ ______
10. Analysis of net funds
As at Cash As at
27 June Flow 2 July
1999 2000
£'000 £'000 £'000
Cash at bank 1,364 1,234 2,598
and in hand
Cash deposits 6,000 (1,500) 4,500
______ ______ ______
7,364 (266) 7,098
Overdrafts (73) 73 -
______ ______ ______
7,291 (193) 7,098
Debt due within (6,051) 1,551 (4,500)
1 year
Finance leases (79) 47 (32)
_____ _____ ______
Total 1,161 1,405 2,566
______ ______ ______
11. The results for the period to 2 July 2000 have been
extracted from the draft accounts upon which the auditors are
yet to report. These results have been prepared utilising the
accounting policies adopted by the Group in the audited
accounts for the period ended 27 June 1999 except for the
adoption of UITF Abstract 24 'Accounting for Start-up Costs'
(see note 4). The statutory accounts for the period ended 27
June 1999 have been delivered to the Registrar of Companies
and were unqualified and did not contain a statement under
section 237 (2) or 237 (3) of the Companies Act 1985.
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