Half Yearly Report

RNS Number : 6752U

Indian Restaurants Group PLC

29 June 2009

 



Indian Restaurants Group Plc

Half Yearly Report

29 June 2009

Chairman's Statement

Indian Restaurants Group plc (AIM: IRGP) is pleased to announce its interim results for the six months ended 31 March 2009. 

The Group operates Indian restaurants and as outlined in our full year results announced in March 2009 trading has been affected by global economic climate uncertainty combined with the UK entering into a recessionary period which has clearly impacted consumer confidence and adversely impacted discretionary spend. The weakness in sterling has resulted in an increase in our costs of core fresh produce and also had an adverse impact on the financial performance. The business also faces cost pressures on manpower costs, rent and utility costs.

The Group generated revenues of £1.3 million in the six months ended 31 March 2009 and a pre-tax loss of £0.47 million (H1 2008: loss of £0.16 million). Sales have increased significantly over the comparative low base of the interim period in the previous year. This is because last year we had only just acquired the Mela Group and the sales figures were just for one month. This years' figures also include Mela Redhill which is a new unit that came into operation in December 2008. Despite the tough economic climate there is good support for our concepts and high quality fresh food/products, in particular the enhancements to the menu and service that we have implemented are being well received by our customers. The feedback from our customers on our food and service remains consistently positive and this is encouraging for the future.

We have noticed that the current economic situation is impacting consumer confidence and spending patterns, in London suburbs, resulting in a reduction in trade during weekdays business whilst Friday and Saturday evenings continue to trade well. To counter this we are evaluating a number of specific promotional activities which will help stimulate business in our quieter periods and give us better utilisation of our resources. With respect to our units in the West End we have started reducing the levels of promotional discounts, in order to protect our overall margin. It is good to see that significant investments made in our promotional activities have resulted encouraging sales, and we will continue to modify our campaigns according to the changing market conditions.

As we stated in our annual report for the year to September 2008 despite investing funds and resources in refurbishing Mela, Herne Hill, the Board has not seen the expected improvement in sales and therefore was continuing to monitor the performance at this unit very carefully and were evaluating options for the restaurant. This unit continues to trade at a loss despite this investment and has failed to respond from a financial perspective. The Company marketed the unit for sale and received some interest but this has not yet materialised into an acceptable offer and hence to protect the Group from further losses it has been decided regrettably to close this unit. 

The brands we have are strong and we are looking at possible opportunities to leverage these brands by seeking additional sources of revenue through wholesaling and forming alliances with other food units with a view of selling our food through their channels.

Outlook

We are adopting a very selective expansion plan in the light of the current challenging economic conditions, whereby we are targeting certain selective areas which will complement our existing units. We are well placed to take advantage of the opportunities when the market recovers. 

Haresh Kanabar

Chairman

29 June 2009

Contact: 

Indian Restaurants Group Plc 

0207 297 0010 

Haresh Kanabar, Chairman 

Amit Pau, Chief Executive 

W.H. Ireland

Tim Cofman-Nicoresti/Katy Birkin

0121 265 6330 

Indian Restaurants Group Plc

Consolidated Interim Income Statement

for the six months ended 31 March 2009

	Note		Unaudited 6 months ended 31 March 2009 £'000	Unaudited 6 months ended 31 March 2008  £'000	Audited Year ended      30 September 2008 £'000
Revenue			1,362	196	1,540
Administrative expenses			(1,836)	(431)	(2,149)
Loss from operations			(474)	(235)	(609)
Finance income			9	71	117
Loss before taxation			(465)	(164)	(492)
Loss for the period			(465)	(164)	(492)

Loss per ordinary share
Basic and diluted loss per share	3		(3.5p)	(1.6p)	(4.2p)

Indian Restaurants Group Plc

Consolidated Interim Balance Sheet

at 31 March 2009

	Note	Unaudited 31 March 2009 £'000	Unaudited 31 March 2008 £'000	Audited 30 September 2008 £'000
Assets
Non-current assets
Goodwill	2	2,137	2,803	2,137
Property, plant & equipment		545	497	480
		2,682	3,300	2,617
Current assets Inventories		39	24	26
Trade and other receivables		267	374	318
Cash and cash equivalents		1,048	2,267	1,372
Total current assets		1,354	2,665	1,716
Total assets		4,036	5,965	4,333
Liabilities
Current liabilities
Trade and other payables		(1,058)	(2,871)	(720)
Financial liabilities- borrowings		(306)	(55)	(420)
Total liabilities		(1,364)	2,926	(1,140)
Net assets		2,672	3,039	3,193
Non-current liabilities
Financial liabilities - borrowings		(351)	-	(407)
Equity		2,321	3,039	2,786
Share capital		1,308	1,308	1,308
Share premium account		3,451	3,396	3,451
Share based payments reserves		133	-	133
Retained losses		(2,571)	(1,165)	(2,106)
Equity attributable to equity holders of the parent		2,321	3,039	2,786

Indian Restaurants Group Plc

Consolidated Interim Cash Flow Statement

for the six months ended 31 March 2009

		Unaudited 6 months ended 31 March 2009 £'000	Unaudited 6 months ended 31 March 2008  £'000	Audited Year ended  30 September 2008 £'000
Cash outflow from operating activities Corporation Tax paid		(23) (9)	(59)	(653)
Net cash outflow from operating activities		(32)	(59)	(653)
Investments		(132)	(325)	(598)
Net interest received		20	71	117
Net cash inflow from returns on investments		(112)	(254)	(481)
Financing activities		(99)	(197)	(243)
Net cash (used in)/from financing activities		(99)	(197)	(243)
(Decrease)/ increase in net cash		(243)	(510)	(1,377)
Cash and cash equivalents at beginning of period		1,161	2,538	2,538
Cash and cash equivalents at end of period		918	2,028	1,161

Indian Restaurants Group Plc

Notes to the consolidated interim statement

for the six months ended 31 March 2009

1.	Basis of preparation

Indian Restaurants Group Plc is a public limited company incorporated and domiciled in United Kingdom. The principal activity of the company is to operate a chain of Indian restaurants. The company's ordinary shares are traded on the AIM market of the London Stock Exchange plc ('AIM').

These interim financial statements for the period ended 31 March 2009, have been prepared on the basis of the recognition and measurement requirements of IFRS in issue that are either endorsed by the EU and effective at 30 June 2007.

IAS 34 'Interim financial reporting' has not been early adopted.

The preparation of the interim statement requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The interim financial statements are unaudited. The financial information contained in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the year to 30 September 2007 has been extracted from the statutory accounts for that year and adjusted for the conversion to IFRS. The statutory accounts for the year ended 30 September 2008, which were prepared under UK GAAP, received an unqualified audit report and did not contain a statement made under Section 237(2) and (3) of the Companies Act 1985, and have been filed with the Registrar of Companies. 

2.	Significant accounting policies

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the group's financial statements.

Basis of consolidation

The consolidated financial information for the period to 31 March 2009 include the results of Indian Restaurants Group Plc and its subsidiary undertakings for that period. Subsidiary undertakings are entities over which the group has the power to control the financial and operating policies so as to obtain benefits from the activities. The group obtains and exercises control through voting rights.

The group adopts the purchase method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange plus any costs directly attributable to the acquisition. The assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill. Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the income statement in the period of the acquisition.

The results of subsidiary undertakings acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. Inter-company transactions and balances between group companies are eliminated.

Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The group makes estimates and assumptions concerning the future. Whilst the directors believe that the estimates and assumptions used in the preparation of the interim financial statements are reasonable, the resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below.

1) Impairment of goodwill

The group tests whether goodwill has suffered any impairment annually or when there is an indication of impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations which require the use of estimates.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the company's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is included in intangible assets and is tested annually for impairment or when there is an indication of impairment. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

On disposal of a subsidiary, the amount of attributable goodwill is included in the determination of the profit and loss on disposal.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation.

The charge for depreciation is calculated to write down the cost of tangible fixed assets to their estimated residual values by equal annual instalments over their expected useful lives which are as follows:

Fixtures and fittings          15% reducing balance

Motor Vehicles                  25% reducing balance

Leasehold building            Straight line over the remaining the term of the lease

Impairment provisions are made where the carrying value of tangible fixed assets exceeds the recoverable amount.

Revenue recognition

Revenue is recognised on the sale of food and beverages, service charges and gratuities, exclusive of value added tax.

Taxation

Current tax, including UK corporation tax and foreign tax, is provided on the group's taxable profits, at amounts expected to be paid using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.

Deferred taxation is provided in full using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates that have been enacted at or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Leased assets

Expenditure on operating leases is charged to the income statement on a basis representative of the benefit derived from the asset, normally on a straight line basis over the lease period.

Where fixed assets are financed by financing arrangements which give rights approximating to ownership they are treated as if they had been purchased outright at their fair value and the corresponding commitments are shown in the balance sheet as obligations under finance leases and hire purchase contracts. Depreciation of fixed assets acquired under finance leases and hire purchase contracts is calculated to write off the attributed cost over the shorter of the lease or contract term and their estimated useful lives by equal annual instalments. The excess of the total rentals over the amount capitalised is treated as interest which is charged to the profit and loss account in proportion to the amounts outstanding under the lease and hire purchase contracts.

Share based payments

The cost of equity-settled transaction with suppliers of goods and services is measured by reference to the fair value of the good or service received, unless that fair value cannot be estimated reliably. The fair value of the good or service received is recognised as an expense as the Group receives the good or service. The cost of equity-settled transactions with employees, and transactions with suppliers where fair value cannot be estimated reliably, is measured by reference to the fair value of their equity instrument. The fair value of the equity instrument is determined at the date of grant, taking into account market based vesting conditions. The fair value is determined using the Black Scholes Model.

No expense is recognised for awards that do not ultimately vest, except for awards where the vesting conditions are conditional upon market conditions, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market conditions, the number of equity instruments that will ultimately vest, or in the case of an instrument subject to a market condition, be treated as vesting as described above. The movement in cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid funds with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within borrowing in current liabilities on the balance sheet.

Financial instruments

Financial assets and liabilities are recognised in the balance sheet when the Group becomes party to the contractual provisions of the instrument.

Trade and other receivables

Trade receivables are measured at cost less any provision necessary when there is objective evidence that the group will not be able to collect all amounts due.

Trade and other payables

Trade and other payables are not interest bearing and are measured at original invoice amount.

3.	Loss per ordinary share

		Unaudited 6 months ended 31 March 2009  £'000	Unaudited 6 months ended 31 March 2008  £'000	Audited Year ended 30 September 2008 £'000
Basic
Loss attributable to ordinary shareholders		465	164	492
Weighted average number of shares 000's		13,080	10,079	11,592
Basic loss per share (pence)		3.5	1.6	4.2

There was no dilutive effect from the share options outstanding during the year.

4.	Consolidated Statement of Changes in Equity

	Share capital - equity	Share premium	Share Based Payments Reserves	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000
Year ended 30 September 2008
At 1 October 2007 Shares issued in the period	948 360	2,991 589	99 -	(1,614) -	2,424 949
Share based payments Expenses on issue of shares	- -	- (129)	34 -	- -	34 (129)
Loss for the period	-	-	-	(492)	(492)
At 30 September 2008	1,308	3,451	133	(2,106)	2,786
Six months ended 31 March 2008
At 1 October 2007	948	2,991	99	(1,515)	2,424
Shares issued in the period Share based payments	360 -	405 -	- 14	- 14	765 14
Loss for the year	-	-	-	(164)	(164)
At 31 March 2008	1,308	3,396	113	(1,665)	3,039
Six months ended 31 March 2009
At 30 September 2008	1,308	3,451	133	(2,106)	2,786
Share based payments	-
Loss for the period	-			(465)	(465)
At 31 March 2009	1,308	3,451	133	(2,571)	2,321

5.	Events after the balance sheet date

Management are not aware of any events occurring between the balance sheet date of these interim financial statements and the date of their approval that would materially impact the information contained within in these financial statements.

 

END

 

 

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