Final Results

Belgo Group PLC 21 September 2001 21 September 2001 Belgo Group PLC Preliminary Results for the 52 weeks ended 1 July 2001 Belgo Group PLC, the leading restaurant group, which operates the well-known brands of Belgo Bierodrome and Strada, together with restaurants such as The Ivy, Le Caprice, J Sheekey and Daphne's, announces its preliminary results for the 52 weeks ended 1 July 2001 Main points * Group turnover up by 12% to £40.0m (2000: £35.7m) * Profit before taxation, goodwill amortisation, exceptional items and discontinued activities of £4.64m (2000: £5.1m) * 19% increase in Basic EPS (excluding goodwill amortisation and impairment provision) to 0.422p (2000: 0.355p). Loss per share after goodwill and exceptional items of 0.199p (2000: earnings per share of 0.283p) * Non cash exceptional charges of £3.7m following the re-assessment of the carrying value of tangible fixed assets and £1.2m for the impairment of the tangible fixed assets of the New York joint venture which was closed in March 2001. * General market conditions continue to be competitive and recent trading has been difficult in certain outlets. * Proposed change of name from Belgo Group PLC to Signature Restaurants PLC reflecting the broad spread of the Group's restaurants. * Proposed share consolidation on a basis of 1 new for every 20 existing shares held * No final dividend (2000: 0.02p per share) For further information please contact: Belgo Group PLC Tel: 020 7557 6333 Andy Bassadone, Chief Executive Nick Fiddler, Finance Director Citigate Dewe Rogerson Simon Rigby / Anthony Kennaway Tel: 020 7638 9571 Chairman's Statement 52 Weeks ended 1 July 2001 For the year ended 1 July 2001, the group reported sales of £40.0 million, an increase of 12% over the preceding year. Profits from continuing operations, prior to goodwill amortisation and exceptional items, were £4.6 million (2000: £5.1 million). This figure was struck prior to taking a one-off exceptional charge of £3.7 million to reflect the impairment of certain of the Group's tangible fixed assets, together with an exceptional impairment of £1.2m in connection with the closure of the Group's joint venture operation in New York. Basic earnings per share, prior to goodwill amortisation and exceptional items were 0.422p, an increase of 19% over the previous year. The loss per share after exceptional items and goodwill amortisation was 0.199p compared to earnings per share of 0.283p in the preceding year. The year ended 1 July 2001 proved difficult. While Strada and Caprice Holdings performed well, a number of our other outlets traded below expectations. London suffered a significant decline in inbound tourism owing to the foot and mouth crisis, the strong pound and the US stock market fall. This had a sharp impact on elements of our business during the second half of our financial year. Margins were mostly maintained and costs reasonably well contained, but profits were disappointing. During the year your Company bought back 19.8% of its share capital from Avado Brands Inc for £5.8 million. This move enhanced earnings per share (prior to exceptional items and goodwill), despite the static overall profit. Your Company took on a debt facility to fund this buy back. At the year end net borrowings were £4 million. In accordance with the accounting standard FRS 11, the Group has taken an impairment provision against certain of its tangible fixed assets to better reflect the board's view of their underlying value. This has given rise to a one-off non-cash exceptional charge of £3.7 million. In addition, the Group has sold its interest in the New York Belgo, which had never made a contribution. This decision was taken after two years of operating the New York joint venture, which failed to provide the expected return for us and our joint venture partner. The combination of these exceptional items produced a one-off charge to the profit and loss statement of £4.97 million. Your board continues to review the performance of under-performing outlets and will take decisive action, where appropriate, to crystallise capital to re-invest in better performing parts of the business. The board is not proposing to pay a dividend. It intends to re-invest cash into developing the Group together with reducing existing debt. Review of Operations As indicated in the interim statement, trading during the period has been competitive and continues to be so. Strada, the Group's high quality Italian concept with wood fired pizza as the centre piece of its offering, continued to develop as a business. Your board believes Strada has sound prospects assuming decent sites at fair rents can continue to be found. There are now six units in operation. Further new opening activities will be directed towards the expansion of this brand. The Belgo/Bierodrome outlets have seen the greatest effect from the down turn in the economy and the reduction in tourism. Our flagship site, Belgo Centraal, continues to trade reasonably well, despite a drop off in sales in recent months. The independent one-off restaurant division experienced mixed results. The Caprice Holdings restaurants continued to trade well with growth in The Ivy, Le Caprice and J Sheekey. However, some of our other outlets in this division showed significant downturn in the last quarter. The current mix of restaurants and bars across the Group means the name Belgo is no longer representative of the majority of our activities. It is therefore intended to change the name of your Company to Signature Restaurants PLC, as this will encompass the diverse nature of our restaurants. The decision to change the name is subject to shareholder approval and accordingly a resolution will be put to shareholders at the Annual General Meeting. Another resolution to be proposed at the Annual General Meeting is to approve a consolidation of the share capital of your Company on the basis of 1 new share for every 20 existing shares held. The principal objective is to narrow the unattractive spread between bid and offer prices, which is a common characteristic of shares with a low absolute price. Prospects Weak trading has continued in certain parts of the Group since the financial year-end to the extent that trading is currently behind year on year. In addition there may be some economic fall out from the dreadful events in the USA earlier this month. If the UK enters a recession or the slowdown becomes more severe then the restaurant sector is unlikely to see any rapid revival until market conditions improve, as ultimately dining out is a discretionary item. However, the Caprice Holdings restaurants with their established following and Strada, with its relatively low average spend and quality of offering, may prove more resilient than other parts of the Group. Efforts will continue to contain costs and restore growth. Further expansion is to be focussed on the Strada restaurants, which require lower capital investment and enjoy better site availability. All planned future expansion will be generated using internal cash flows Luke Johnson Chairman 21 September 2001 Consolidated Profit And Loss Account 52 weeks ended 1 July 2001 (unaudited) Notes Before Exceptional Total 53 weeks exceptional items and items and goodwill ended goodwill amortisation amortisation 2 July 2000 (audited) £'000 £'000 £'000 £'000 Turnover 1 Continuing 40,484 - 40,484 36,573 Less share of joint (516) - (516) (898) ventures (discontinued) ______ ______ ______ ______ Group turnover 39,968 - 39,968 35,675 Cost of sales (11,227) - (11,227) (10,056) ______ ______ ______ ______ Gross profit 28,741 - 28,741 25,619 Administrative expenses (24,000) (4,457) (28,457) (21,303) Operating profit before 4,741 - 4,741 5,050 exceptional items and goodwill amortisation Provision for the impairment of tangible 3 - (3,723) (3,723) - fixed assets Amortisation of 2 - (734) (734) (734) goodwill Group operating profit/ 4,741 (4,457) 284 4,316 (loss) Share of joint venture 4 (215) (1,247) (1,462) (196) loss including impairment provision (discontinued) ______ ______ ______ ______ 4,526 (5,704) (1,178) 4,120 Net interest (paid) / (105) - . (105) 78 received Share of joint venture (102) - . (102) (140) interest payable (discontinued) ______ ______ ______ ______ Profit /(loss) on 4,319 (5,704) (1,385) 4,058 ordinary activities before taxation Taxation (444) - . (444) (1,156) ______ ______ ______ ______ Profit / (loss) on 3,875 (5,704) (1,829) 2,902 ordinary activities after taxation Dividends - equity 5 - - . - . (307) ______ ______ ______ ______ Profit / (loss) for the 3,875 (5,704) (1,829) 2,595 period ______ ______ ______ ______ (Loss) / Earnings per ordinary share - basic 6 (0.199p) 0.283p - diluted 6 (0.199p) 0.259p Earnings per ordinary share excluding exceptional items and goodwill amortisation - basic 6 0.422p 0.355p - diluted 6 0.406p 0.325p Consolidated Balance Sheet At 1 July At 2 July 2001 2000 (unaudited) (audited) £'000 £'000 Fixed Assets Intangible assets 2 12,426 13,160 Tangible assets 15,932 16,491 Investments Joint ventures 4 Share of gross assets 71 1,330 Share of gross liabilities (262) (1,900) Other investments 63 120 ______ ______ 28,230 29,201 Current Assets Stock 1,286 1,052 Debtors 2,197 2,448 Cash at bank and in hand 4,500 7,098 ______ ______ 7,983 10,598 Creditors: amounts falling due within one year (14,922) (12,611) ______ ______ Net current liabilities (6,939) (2,013) ______ ______ Total assets less current liabilities 21,291 27,188 Creditors: falling due after more than one year (1,875) - Provision for liabilities and charges - - ______ ______ Net assets 19,416 27,188 ______ ______ Capital and Reserves Called up share capital 8,226 10,244 Reserves 11,190 16,944 ______ ______ Equity shareholders' funds 7 19,416 27,188 ______ ______ Consolidated cash flow statement Notes 52 weeks ended 53 weeks ended 1 July 2001 2 July 2000 (unaudited) (audited) £'000 £'000 Net cash inflow from operating activities 8 6,874 6,172 Returns on investment and servicing of finance Interest received 311 315 Interest paid (191) (10) Finance lease interest (1) (2) Loan note interest (224) (225) ______ ______ (105) 78 Taxation UK Corporation tax (707) (89) Capital expenditure and financial investment Purchase of tangible fixed assets (4,527) (4,463) Disposal proceeds on sales of fixed assets 17 14 ______ ______ (4,510) (4,449) Equity dividends paid (205) (307) ______ ______ Cash inflow before management of liquid 1,347 1,405 resources and financing Management of liquid resources Decrease in restricted deposits - 1,500 ______ ______ - 1,500 Financing Redemption of ordinary share capital and (5,943) - associated costs Issue of ordinary share capital 21 - Loans to Joint Ventures (1,964) - Debt due within one year - repayment of loans (375) (1,551) - increase in short term bank loans 750 - Debt due beyond one year - increase in long term bank loans 2,250 - Repayment of finance leases (20) (47) ______ ______ Net cash outflow from financing (5,281) (1,598) ______ ______ (Decrease) / Increase in cash in the period 9 (3,934) 1,307 ______ ______ 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. 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 net assets acquired is capitalised and amortised over 20 years being the estimated useful economic life. 3. Provisions for the impairment of tangible fixed assets of £3.7 million were made in accordance with FRS 11 - 'Impairment of fixed assets and goodwill' - and relate to the reassessment of the carrying value of certain assets. 4. In accordance with FRS 9 joint ventures are accounted for using the gross equity method. The Group's share of the joint venture's result includes an impairment provision of £1,247,000 to reflect the expected net realisable value of the joint venture's fixed assets. The investments in joint ventures may be further analysed as follows: £'000 At 2 July 2000 (570) Exchange difference (47) Share of joint venture losses including impairment provision and (1,564) interest Loan to joint venture waived 1,990 ______ At 1 July 2001 (191) ______ 5. The Directors do not propose a final dividend (2000: final dividend 0.02p per share). 6. The calculation of loss/earnings per share is based on the weighted average number of issued ordinary shares during the period of 918,670,624 (2000: 1,023,838,870) and loss of £1,829,000 (2000 earnings of £2,902,000) being the result after taxation for the period. Diluted earnings per share includes 36,880,249 (2000: 94,763,874) shares in respect of options and warrants, giving a total number of shares of 955,550,872 (2000: 1,118,602,744). Earnings per share excluding the amortisation of goodwill of £734,000 (2000: £734,000) and exceptional items of £4,970,000 (2000: nil) is based on adjusted earnings of £3,875,000 (2000: £3,636,000). 7. The movement in shareholders' funds can be summarised as follows: As at As at 1 July 2001 2 July 2000 £'000 £'000 (Loss)/profit for the financial period (1,829) 2,902 Dividends - (307) ______ ______ (1,829) 2,595 New share capital subscribed in period 21 90 Repurchase of own shares including costs (5,943) - Exchange differences (21) (51) ______ ______ Net (decrease)/ increase in shareholders (7,772) 2,634 funds Openings shareholders' funds 27,188 24,554 ______ ______ Closing shareholders' funds 19,416 27,188 ______ ______ 8. Reconciliation of operating profit to net cash inflow from operating activities 52 weeks 53 weeks ended ended 1 2 July July 2001 2000 £'000 £'000 Operating profit 284 4,316 Depreciation charge 1,345 1,052 Amortisation of goodwill 734 734 Impairment of tangible fixed assets 3,723 - Loss on disposal of fixed assets 1 - Increase in stock (234) (221) Decrease/(increase) in debtors 128 (452) Increase in creditors 893 743 _____ ______ Net cash inflow from operating activities 6,874 6,172 ______ ______ 9. Reconciliation of net cash inflow to movement in net (debt)/funds 52 weeks 53 weeks ended ended 1 July 2001 2 July 2000 £'000 £'000 (Decrease)/increase in cash in the period (3,934) 1,307 Cash (inflow)/outflow from movement in debt and (2,605) 1,598 lease financing Decrease in cash deposits - (1,500) _____ ______ Movement in net (debt) / funds in the period (6,539) 1,405 Opening net funds 2,566 1,161 _____ _____ Closing net (debt)/ funds (3,973) 2,566 ______ ______ 10. Analysis of net debt As at Cash As at 2 July 2000 Flow 1 July 2001 £'000 £'000 £'000 Cash at bank and in hand 2,598 (2,598) - Cash deposits 4,500 - 4,500 ______ ______ ______ 7,098 (2,598) 4,500 Overdrafts - (1,336) (1,336) ______ ______ ______ 7,098 (3,934) 3,164 Debt due within 1 year (4,500) (750) (5,250) Debt due after 1 year - (1,875) (1,875) Finance leases (32) 20 (12) _____ _____ ______ Total 2,566 (6,539) (3,973) ______ ______ ______ 11. The results for the period to 1 July 2001 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 2 July 2000. The statutory accounts for the period ended 2 July 2000 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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