Final Results

RNS Number : 3665J

Indian Restaurants Group PLC

29 March 2010

 



INDIAN RESTAURANTS GROUP PLC

(AIM: IRGP)

Final results for the year ended 30 September 2009

Chairman's Statement

I am pleased to report Indian Restaurant Group plc's ("IRGP" or the "Group") results for the year ended 30 September 2009.

The Group through its Indian restaurants generated revenues of £2.47 million in the year to 30 September 2009 compared to revenues of £1.10 million in the corresponding previous year. It should be noted that whilst the reported revenue is significantly up year on year the comparative figure only includes revenues for the group from February 2008 being the acquisition date. It has been a rather difficult year and in line with the other competitors in the restaurant sector we have had to increase our promotional activity quite substantially to stimulate demand against a background of tough trading conditions.  In a slowing economy, the promotional activities have helped us in increasing brand awareness and also aim to encourage customer repeat visits. The Group made a loss before tax of £0.68 million, compared with a loss before tax of £0.42 million in the previous period. Loss per share for the year amounted to 5.0 pence, compared with a loss of 3.6 pence per share in the previous year. As at 30 September 2009 the Group had net assets of £1.73 million, versus £2.79 million for the previous year. The cash position for the Group at the year-end stood at £0.65 million.

As  previously  reported our 3 Monkeys restaurant based at Herne Hill had been underperforming. Unfortunately, despite the efforts made by the Group in terms of additional resources being deployed and refurbishing the restaurant, unfortunately the underperformance continued. Therefore, we were left with no choice but to shut it down. 3 Monkeys was operated through a standalone company called Param Consultancy Limited and this company was put into administration in July 2009. The Group has incurred a loss on disposal of Param Consultancy Limited of £405,000 and this is reflected in our financial results.

Our new restaurant Mela which is situated in Redhill, Surrey was opened in December 2008 its business continues to make slow progress but is operating below capacity. The economic downturn seems to have had a much more adverse impact on business in the suburbs as opposed to central London. We have made attempted to counteract this by making changes to the model by incorporating local tastes in the menu and also offer a takeaway service however these initiatives have to date had limited success. Management have also been targeting the corporate market to increase revenues.  It is still early days  for Mela but we are closely monitoring the performance of this unit.

 Clearly during a period of economic recession and depressed consumer confidence it is very important that we manage our costs effectively and from an operational perspective our focus continues to be on efficiency improvements in the execution of our restaurant activities. Manpower costs are a large part of our costs we have been focussing on better utilisation of manpower to relect the fluctuations in our business demand. The weakness of Sterling continues to impact us adversely through higher costs of the produce which we are finding it difficult to pass on these costs to our customers through increases in pricing.

Given the difficult market conditions we decided not to expand activities during the year. In January  we announced that each of the issued Existing Ordinary Shares with a nominal value of 10 pence would be sub-divided into one new ordinary share of 0.5 pence and one deferred share of 9.5 pence. This split would enable the company to raise additional equity to expand the business as and when it becomes appropriate.

Outlook

The new financial year had started somewhat slowly as we were adversely affected by the unusually cold and snowy weather. Nevertheless we have confidence in our product and believe as economic conditions stabilise we are well placed to deliver an improved trading performance.

Haresh Kanabar

Chairman

29 March 2010

Contacts:
Indian Restaurant Group plc	www.indianrestaurantsgroup.com
Haresh Kanabar, Chairman	[phone]
Amit Pau, Chief Executive	[phone]
WH Ireland Limited	www.wh-ireland.co.uk
Mike Coe / Marc Davies	[phone]

consolidated income statement

for the year ended 30 september 2009

		Year ended 30 September	Year ended 30 September
	Note	2009	2008
		£'000	£'000
			Restated
Revenue		2,470	1,108
Cost of sales		(657)	(200)
gross profit		1,813	908
Administrative expenses		(2,508)	(1,433)
Operating loss		(695)	(525)
Finance income		26	117
Finance costs		(10)	(12)
Loss on ordinary activities before tax		(679)	(420)
Tax expense		26	-
Loss for the year from continuing activities		(653)	(420)
Discontinued operations
Loss for the year from discontinued operations		(405)	(72)
Loss for the year		(1,058)	(492)
Basic and diluted loss per share
From continuing operations	3	(5.0)p	(3.6)p
From discontinuing operations	3	(3.1)p	(0.6)p
		(8.1)p	(4.2)p

CONSOLIDATED balance sheet

AS AT 30 sEPTEMBER 2009

		As at 30 September	As at   30 September
		2009	2008
		£'000	£'000
ASSETS
Non-current assets
Goodwill		1,473	2,137
Property, plant and equipment		357	480
		1,830	2,617
Current assets
Inventories		20	26
Trade and other receivables		218	318
Cash and cash equivalents		650	1,372
		888	1,716
LIABILITIES
Current liabilities
Trade and other payables		(553)	(720)
Financial liabilities - borrowings		(216)	(420)
		(769)	(1,140)
Net current assets		119	576
Non-current liabilities
Financial liabilities - borrowings		(190)	(407)
Provisions for other liabilities and charges		(25)	-
		(215)	(407)
NET ASSETS		1,734	2,786
SHAREHOLDERS' EQUITY
Called up share capital - equity		1,308	1,308
Share premium account		3,451	3,451
Share based payments reserve		139	133
Retained earnings		(3,164)	(2,106)
TOTAL EQUITY		1,734	2,786

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 SEPTEMBER 2009

		Year ended 30 September	Year ended 30 September
		2009	2008
		£'000	£'000
			Restated
Net cash flow from operating activities		(413)	(653)
Cash flows from investing activities
Purchase of property, plant and equipment		(127)	(95)
Disposal/acquisition of subsidiaries, including overdraft		45	(503)
Interest received		26	117
Net cash used in investing activities - continuing operations		(56)	(481)
Net cash used in investing activities - discontinued operations		-	-
Net cash used in investing activities		(56)	(481)
Cash flows from financing activities
Share issue costs		-	(129)
Repayment of bank loans and finance leases		(103)	(67)
Income tax paid		-	(22)
Interest paid		(10)	(25)
Net cash used in financing activities - continuing operations		(113)	(243)
Net cash used in financing activities - discontinued activities		(31)	-
Net cash used in financing activities		(144)	(243)
Decrease in cash and cash equivalents		(613)	(1,377)
Cash and cash equivalents at start of year		1,161	2,538
Cash and cash equivalents at end of year		548	1,161

consolidated Statement of changes in equity

for the year ended 30 september 2009

	Share capital - equity	Share premium	Share based payments reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000
At 1 October 2007	948	2,991	99	(1,614)	2,424
Shares issued in the year	360	589	-	-	949
Share based payments	-	-	34	-	34
Expenses on issue of shares	-	(129)	-	-	(129)
Loss for the year attributable to equity interests	-	-	-	(492)	(492)
At 1 October 2008	1,308	3,451	133	(2,106)	2,786
Share based payments	-	-	6	-	6
Loss for the year attributable to equity interests	-	-	-	(1,058)	(1,058)
At 30 September 2009	1,308	3,451	139	(3,164)	1,734

COMPANY

	Share capital- equity	Share premium	Share based payments reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000
At 1 October 2007	948	2,991	99	(1,614)	2,424
Shares issued in the year	360	589	-	-	949
Share based payments	-	-	34	-	34
Expenses on issue of shares	-	(129)	-	-	(129)
Loss for the year attributable to equity interests	-	-	-	(326)	(326)
At 1 October 2008	1,308	3,451	133	(1,940)	2,952
Share based payments	-	-	6	-	6
Loss for the year attributable to equity interests	-	-	-	(942)	(942)
At 30 September 2009	1,308	3,451	139	(2,882)	2,016

ABBREVIATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2009

1.    Basis of preparation

Indian Restaurant 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").

The registered office of the Company is 8-10 New Fetter Lane, London EC4A 1RS.

The consolidated and the company's financial statements for the year ended 30 September 2009 have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union, including International Accounting Standards ('IAS') and interpretations issued by the International Accounting Standards Board.

The comparative results for the year ended 30 September 2008 have been restated to show the impact of discontinued operations.

New Standards and Interpretations

The IASB and IFRIC have issued the following standards and interpretations which were in issue but not in force at 30 September 2009:

International Accounting standards (IAS/IFRSs)

IFRS 2       Share Based Payments (June 2009)

IFRS 3       Business Combinations (revised 2008)

IFRS 5       Non current assets held for sale and discontinued operations (April 2009)

IFRS 7       Financial Instruments: Disclosures (revised March 2009)

IFRS 8       Operating segments (April 2009)

IAS 1         Presentation of financial statements (April 2009)

IAS 7         Statement of Cash Flows (April 2009)

IAS 16       Property, Plant and Equipment (May 2008)

IAS 17       Leases (April 2009)

IAS 19       Employee Benefits (May 2008)

IAS 20       Government Grants and Disclosure of Government Assistance (May 2008)

IAS 23       Borrowing Costs (May 2008)

IAS 27       Consolidated and Separate Financial Statements (May 2008)

IAS 28       Investments in Associates (May 2008)

IAS 29       Financial Reporting in Hyperinflationary Economies (May 2008)

IAS 31       Interests in Joint Ventures (May 2008)

IAS 32       Financial Instruments: Presentation (2009)

IAS 36       Impairment of Assets (April 2009)

IAS 38       Intangible Assets (April 2009)

IAS 39       Financial Instruments: Recognition and Measurement (April 2009)

IAS 40       Investment Property (May 2008)

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group when the relevant standards and interpretations come into effect, except for IAS 1 Presentation of Financial Statements.  IAS 1 will have no quantitative effect but may impact disclosure and format that needs to be followed.  The directors do not anticipate the early adoption of any of the above standards.

2.    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.

Going concern

The consolidated financial statements have been prepared on a going basis as, making appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future at the time of approving the financial statements. 

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company made up to 30 September 2009.  The excess of cost of acquisition over the fair values of the Group's share of identifiable net assets acquired is recognised as goodwill.  Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired is recognised directly in the income statement.

Business combinations

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

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of the Group's accounting policies with respect to the carrying amounts of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting year.  The judgements, estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, including current and expected economic conditions.  Although these judgements, estimates and associated assumptions are based on management's best knowledge of current events and circumstances, the actual results may differ.  Estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the year in which the estimate is revised and in any future years affected.

The judgements, estimates and assumptions which are of most significance to the Group are detailed below:

Goodwill

The Group tests goodwill for impairment on an annual basis or more frequently if there are indications that the amount may be impaired.  The impairment analysis for such assets is principally based upon discounted estimated future cash flows based on value in use calculations.  Such an analysis includes an estimation of the future anticipated results and cash flows, annual growth rates and the appropriate discount rates.

Valuation of share based payments

The charge for share based payments is calculated in accordance with the methodology described in note 20.  The model requires highly subjective assumptions to be made including the future volatility of the Company's share price, expected dividend yield and risk-free interest rates.

Segmental Reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.  A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments.

The Group's primary reporting format is by business segment and its secondary format is by geographical segment.

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.

Property, plant and equipment

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

The charge for depreciation is calculated to write down the cost of tangible fixed assets to their estimated residual values over their expected useful lives, as follows:

Leasehold premises                                                over the term of the lease

Plant and machinery                                               15% reducing balance

     Fixtures and fittings                                            15% reducing balance

Motor vehicles                                                        25% reducing balance

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

Revenue recognition

Revenue represents the fair value of the consideration received or receivable, net of Value Added Tax, for goods sold and services provided to customers after deducting discounts.  Revenue is recognised when the significant risks and rewards of ownership are transferred.

Deferred taxation

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 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 Company operates an employee share scheme under which it makes equity-settled share based payments to certain employees.  For share based payments to employees of the Company, the fair value is determined at the date of grant using a Black Scholes model, and is expensed on a straight line basis together with a corresponding increase in equity over the vesting period, based on the group's estimate of the number of shares that will vest.

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.

Borrowing costs

All borrowing costs are recognised in the income statement for the period in which they are incurred.

Investments available for sale

Investments classified as available for sale are initially recorded at fair value including transaction costs.  Quoted investments are held at fair value and measured either at bid price or latest traded price, depending on convention of the exchange on which the investment is quoted.  Such instruments are subsequently measured at fair value with gains and losses being recognised directly in equity until the instrument is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is recycled to the income statement and recognised in profit or loss for the period.  Impairment losses are recognised in the Income Statement when there is objective evidence of impairment. 

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.

        inventories

        Inventories are stated at the lower of cost or net realisable value.

3.    Loss per share

		30 September 2009		30 September 2008
	Basic
	Loss from continuing activities (£'000)	(653)		(420)
	Loss from discontinuing activities (£'000)	(405)		(72)
		(1,058)		(492)
	Number of shares	13,079,850		11,591,964
	Basic loss per share (p)
	From continuing operations	(5.0)p		(3.6)p
	From discontinuing operations	(3.1)p		(0.6)p
		(8.1)p		(4.2)p

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

4.   Copies of the 2009 Annual Report and Accounts will be posted to shareholders shortly and will be available on the Company's website at www.indiaoutsourcingservices.com. Further copies may be obtained by contacting the Company Secretary at Indian Restaurants Group plc, Queens House, 1 Leicester Place, London WC2H 7BP.

 

END

 

 

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