RNS Number:2363P
Gowrings PLC
02 September 2003
FOR RELEASE 7.00 AM 2 SEPTEMBER 2003
GOWRINGS PLC
Focused on developing the restaurant business
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2003
Group
* Turnover #19.4m (2002 : #53.0m includes #33.7m from discontinued
businesses)
* Interest charges down at #167,000 (2002 : #307,000)
* Investigation costs into accounting irregularities #129,000
* Loss before tax #916,000 (2002 : #490,000 loss includes #805,000
profit from discontinued businesses)
* Interim dividend maintained at 1p
* Assets per share 108p
Restaurants
* Turnover up 2%
* Operating results improved by #540,000
* Closing two loss-making stores in second half
* Opening two new stores in second half
Accident Repair Centres
* Turnover down to #3.9m (2002 : #4.1m)
* Comparable operating result down #119,000
Outlook
* Stronger second half to come
* Restaurant comparable sales up 2.5% in two months to end August
* Investigation costs and the repair centre performance may mean the
year end result is below market expectations
Enquiries:
Gowrings plc 01635 866055
Derek Coulson, Chief Executive
David Gray, Finance Director
Beattie Financial 020 7398 3300
Brian Coleman-Smith / Amanda Sheehy
GOWRINGS PLC
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2003
CHAIRMAN'S STATEMENT
The year to December 2002 was a year of major transition for the company and we
are now focusing on developing our restaurant businesses.
We are pleased that trading for our continuing restaurant businesses is ahead of
last year, with sales up 2% on a like-for-like basis and an operational
improvement of #540,000. The division has seen not only a rise in sales but an
encouraging improvement in overall operating margins, helped by new marketing
and products from Burger King together with our own internal initiatives.
The Group results are categorised under continuing and discontinued operations
to reflect the sale of our motor dealership operations in 2002. Turnover for
continuing operations remained static at #19,379,000. Continuing operations
showed a loss of #620,000 an improvement of #368,000 on the comparable period
last year.
The charge of #129,000, shown under discontinued, relates to costs of the
investigation into last year's accounting irregularities including forensic
accountants' costs. Interest charges are down at #167,000 (2002 : #307,000).
Without the benefit of the discontinued businesses the loss before taxation is
#916,000 compared to a loss in 2002 of #490,000 and after tax the loss is
#744,000 compared to a loss of #457,000.
The accident repair centres have experienced reduced levels of business, in
common with the rest of the sector, as a result of the dry spring weather. This
year the centres are carrying #91,000 of administration costs which was absorbed
in dealerships last year.
Dividends
An interim dividend of 1.0p is declared (2002 : 1.0p) which will be paid on 3
November 2003 to shareholders on the register on 10 October 2003.
Outlook
The second half of the year, traditionally, has been stronger in the Restaurant
Division. Sales in July were excellent, up 8% like-for-like on last year
although August has been adversely impacted by the exceptionally hot weather.
Nevertheless, we remain confident of maintaining the improving trend from the
first half. We continue to rationalise the estate with the closure of two
loss-making stores and the opening of two new restaurants in the second half.
The three remaining accident repair centres have experienced an improvement in
sales since June. As a result we anticipate a recovery in the second half and
continue to look at ways of reducing our cost base. However with the
investigation costs and repair centre performance in the first six months this
may mean that the year end result will be below market expectations.
As a management team we are determined to improve the Group's results. Our
strategy is to focus on our restaurant businesses where we feel there are good
opportunities for long-term growth.
Derek Coulson Chairman
and Chief Executive
1 September 2003
OPERATIONAL REVIEW
Having reorganised the company into a mainly restaurant focused group, I decided
to take direct control of the operations for all our activities. I am delighted
at the way our management teams have responded, and we are now seeing the
benefits with improved operating margins for our restaurants. One of the biggest
single influences on our business is the weather, particularly this year where
we have experienced a dry spring and an exceptionally hot summer. Overall, I am
pleased at the improvement not only in the continuing operations but in reduced
interest costs from lower borrowings and also reduced head office costs.
Restaurants
A good performance with sales up from #15,247,000 to #15,517,000 with
like-for-like sales up 2%. More importantly retained margins have improved by 2%
helping to reduce losses from #684,000 to #144,000 in what is traditionally our
slowest part of the year.
The Burger King brand has settled down under its new owners and we have
benefited from new marketing and products. In January we introduced the 'Real
Deal' to target cost-conscious consumers, and followed this with new promotional
products at good value which has helped us increase sales levels. The summer has
seen the launch of a light alternative range and an ice cream shake.
Internally we launched a programme called 'Raise The Game' which involves
comparing restaurant performance at all levels together with a review of local
marketing, contracts and a review of computer systems. These initiatives have
helped us improve our overall retained margins.
We have also taken the opportunity to further rationalise our estate. On 31 July
we sold the Sutton Coldfield store and on 31 August we closed New Street
Birmingham. This is in preparation for the opening of our new flagship
restaurant in the impressive Bull Ring shopping centre which opens on 4
September. We also opened a new kiosk unit in Reading in July. Overall these
changes should improve profitability by #250,000 in a full year.
Trading in July was excellent with like-for-like sales up 8%, helped by the
adult and kids' promotions linked to the new 'Hulk' movie. August, by contrast,
has experienced a like-for-like sales fall due to the exceptionally hot weather,
although our south coast sites have benefited from an influx of tourists. The
trend since the hot weather finished is positive again.
Accident Repair Centres
Sales for our three repair centres fell from #4,084,000 to #3,862,000. This is
as a result of the very dry February to April period when we are normally very
busy. This has put pressure on margins with a lot of smaller less profitable
repairs. Overall we made a loss of #143,000 compared with a profit of #67,000
last year, although this year's figures include administration costs of #91,000
which was not allocated specifically to the repair centres last year. Recent
trading, whilst improved, is not back to last year's levels although we expect
an improvement in the autumn.
Finance
There has been no major change to the shape and structure of the Group since the
year end, apart from the planned closure of two stores and the opening of two
new restaurants.
Borrowings at the end of the half year were #7.8m, an outflow in the first half
of #1.6m. This is made up of #991,000 outflow from operating activities, plus
interest of #165,000 and capital expenditure of #435,000. Creditors have reduced
by #1.3m of which #600,000 relates to lower trade creditors in Restaurants
because of lower volumes in June than in December. In the second half we have
the commitment for the two new Burger King restaurants, which total #750,000,
plus a modest sum for other capital expenditure. We expect to see an inflow of
funds in the second half of the year.
The interest cost is reduced due to the lower borrowings and the continued lower
interest rates.
The tax credit of #172,000 is based on a calculation of the full year's expected
charge. The main adjustment to the reported pre-tax figure is the add-back of
the disallowable items such as non-qualifying depreciation for tax purposes and
goodwill. This figure has been split evenly between first and second half.
As we stated in the Annual Report we intend to replace the existing bank loan
facility and conversations with the bank have already taken place. We expect to
have the new facility in place well before the end of the year.
Net assets per share are 108p at the end of June 2003.
Derek Coulson Chairman
and Chief Executive
1 September 2003
Profit and loss account
For the half year ended 30 June 2003
Unaudited Unaudited Audited
Half year Half year Year to
to 30 June to 30 June 31 Dec
Notes 2003 2002 2002
#'000 #'000 #'000
Turnover: continuing 19,379 19,331 40,983
discontinued - 33,717 37,997
---------- ---------- ----------
1 19,379 53,048 78,980
Cost of sales (19,150) (51,865) (76,981)
---------- ---------- ----------
Gross profit 229 1,183 1,999
Administration expenses (978) (1,366) (3,324)
------ ------ ------
Operating (loss)/profit: (620) (988) (542)
continuing
discontinued (129) 805 (783)
------ ------ ------
---------- ---------- ----------
1 (749) (183) (1,325)
Exceptional items 2 - - (2,479)
---------- ---------- ----------
Loss on ordinary activities (749) (183) (3,804)
before interest
Net interest payable and (167) (307) (522)
similar charges
---------- ---------- ----------
Loss on ordinary activities (916) (490) (4,326)
before taxation
Taxation 3 172 33 413
--------- ---------- ----------
Loss on ordinary activities (744) (457) (3,913)
after taxation
Dividends (91) (92) (183)
---------- ---------- ----------
Retained loss for the (835) (549) (4,096)
financial period
====== ====== ======
Dividend per share 4 1.00p 1.00p 2.00p
Earnings per share
Basic 5 (8.22p) (5.06p) (43.32p)
Before goodwill 5 (7.25p) (3.91p) (41.01p)
amortisation
Before goodwill amortisation 5 (7.25p) (3.91p) (14.48p)
and exceptional items
Diluted 5 (8.22p) (5.04p) (42.80p)
Balance sheet
as at 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2003 2002 2002
restated
#'000 #'000 #'000
Fixed assets
Intangible assets 2,407 2,963 2,497
Tangible assets 17,264 21,781 17,758
Investments 34 36 34
---------- ------------ ------------
19,705 24,780 20,289
---------- ------------ ------------
Current assets
Stocks 549 6,287 717
Debtors 3,363 5,799 3,328
Cash at bank 128 143 156
--------- ------------ ------------
4,040 12,229 4,201
Creditors: amounts falling due (7,240) (14,830) (6,944)
within one year
--------- ------------ ------------
Net current liabilities (3,200) (2,601) (2,743)
--------- ------------ ------------
Total assets less current 16,505 22,179 17,546
liabilities
Creditors: amounts falling due (6,000) (7,000) (6,000)
after more than one year
Provisions for liabilities and (775) (1,067) (981)
charges
---------- ------------ ------------
Net assets 9,730 14,112 10,565
====== ======= =======
Capital and reserves
Called up share capital 905 905 905
Share premium account 3,939 3,939 3,939
Capital redemption reserve 27 27 27
Profit and loss account 4,859 9,241 5,694
--------- ------------ ------------
Shareholders' funds 9,730 14,112 10,565
====== ======= =======
Cash flow statement
For the half year ended 30 June 2003
Unaudited Unaudited Audited
Half year Half year Year to
to 30 June 2003 to 30 June 31 Dec
#'000 2002 2002
#'000 #'000
Operating loss (749) (183) (3,804)
Depreciation and amortisation 1,004 1,154 2,242
Asset write-down - 2,205
(Profit)/loss on sale of fixed - (7) 44
assets
Working capital (1,246) (1,419) 1,450
---------- ------------ ------------
Net cash (outflow)/inflow from (991) (455) 2,137
operating activities
Returns on investment and (165) (322) (558)
servicing of finance
Taxation 1 (136) (240)
Capital expenditure
Purchase of tangible fixed (435) (1,677) (2,338)
assets
Purchase of intangible fixed (9) (25) (25)
assets
Sale of tangible fixed assets - 31 44
Disposals - - 5,288
Dividends paid - (272) (362)
----------- ------------ ------------
Net cash (outflow)/inflow before (1,599) (2,856) 3,946
financing
Financing
Net movement on share capital - 22 22
Increase in debt - - (3,000)
----------- ------------ ------------
(Decrease)/increase in cash in (1,599) (2,834) 968
financial period
======= ======= =======
Reconciliation of net cash flow to movement in net debt
For the half year ended 30 June 2003
Unaudited Unaudited Audited
Half year to 30 Half year Year to
June
2003 to 30 June 31 Dec
#'000 2002 2002
#'000 #'000
(Decrease)/increase in cash in (1,599) (2,834) 968
financial period
Cash inflow from increase in debt - - 3,000
--------- ---------- ----------
Change in net debt resulting from (1,599) (2,834) 3,968
cash flows
Net debt brought forward (6,168) (10,136) (10,136)
---------- ---------- ----------
Net debt carried forward (7,767) (12,970) (6,168)
====== ====== ======
Notes
1. i) The analysis of turnover and operating profit is as follows:
Unaudited Unaudited Audited
Half year Half year Year to
to 30 June to 30 June 31 Dec
2003 2002 2002
#'000 #'000 #'000
Turnover
Restaurants 15,517 15,247 32,948
Motor: continuing 3,862 4,084 8,035
---------- ---------- ----------
19,379 19,331 40,983
Motor: discontinued - 33,717 37,997
---------- ---------- ----------
Total 19,379 53,048 78,980
====== ====== ======
Operating profit
Restaurants (144) (684) 28
Motor: continuing (see 1.ii) below) (143) 67 120
---------- ---------- ---------
(287) (617) 148
Motor: discontinued (see 1.iii) (129) 805 (783)
below)
---------- ---------- ----------
(416) 188 (635)
Head office costs (333) (371) (690)
----------- ---------- -----------
Total (749) (183) (1,325)
====== ====== =======
ii) The 2003 figure includes the direct administration burden in the
sum of #91,000. Up to the time of the disposal of the discontinued motor
businesses no administration cost was allocated to the accident repair centres.
iii) The amounts in respect of the discontinued businesses as regards cost of
sales and administration are as follows:
Cost of sales - 32,459 37,214
---------- ---------- ----------
Administration 129 453 1,566
---------- ---------- ---------
The administration costs in 2003 relate to the investigation work
being carried out into the accounting irregularity reported last year.
2. The exceptional items reported in 2002 were as follows:
#'000
Profit on sale of motor businesses 2
Reorganisation costs (276)
Impairment of tangible and intangible fixed assets (2,205)
---------
(2,479)
=====
3. The taxation credit of #172,000 for the half year to 30 June 2003
is based upon an estimate of the Group's likely tax charge for the current year.
Non-qualifying depreciation for tax purposes and goodwill has been split equally
between the first half and second half.
4. The interim dividend of 1.00p per share (2002 : 1.0p) will be
paid on 3 November 2003 to shareholders on the register at close of business on
10 October 2003.
5.
Unaudited Unaudited Audited
Half year Half year Year to
to 30 June to 30 June 31 Dec
2003 2002 2002
#'000 #'000 #'000
Earnings
Basic and diluted earnings (744) (457) (3,913)
Adjustment for goodwill amortisation 88 104 209
------- ------ --------
(656) (353) (3,704)
Adjustment for exceptional items - - 2,479
Tax on exceptional items - - (83)
------ ------ --------
Adjusted loss before amortisation of (656) (353) (1,308)
goodwill and exceptional items
------- ------- ---------
Earnings per share
Basic (8.22p) (5.06p) (43.32p)
Before goodwill amortisation (7.25p) (3.91p) (41.01p)
Before goodwill amortisation and (7.25p) (3.91p) (14.48p)
exceptional items
Diluted (8.22p) (5.04p) (42.80p)
Earnings per share are calculated by dividing the loss after tax by 9,048,460
ordinary shares (2002 : 9,031,857 shares), being the weighted average number of
shares in issue during the period. The earnings per share before amortisation of
goodwill uses the loss after tax, adjusted to exclude the effect of the
amortisation of goodwill, divided by the weighted average number of shares. The
earnings before amortisation of goodwill and exceptional items uses the loss
before tax, adjusted to exclude the effect of amortisation of goodwill and
exceptional items net of tax divided by the weighted average number of shares.
The diluted earnings per share uses the loss after tax divided by the weighted
average number of shares plus further shares, representing the fair value of the
weighted average number of shares under option during the period. In 2003 this
further number is nil (2002 : 44,118).
6. Net borrowings at 30 June 2003 were #7,767,000 (2002 : #12,970,000).
The Group has an unsecured bank loan facility of #6,000,000 (2002 : #7,000,000),
until 31 August 2004. All of this facility was drawn down at 30 June 2003 (2002
: #7,000,000). In addition, at 30 June 2003, the Group had an unsecured bank
overdraft facility totalling #2,000,000 (2002 : #5,000,000). As at 30 June 2003
#1,895,000 was drawn from the overdraft facility (2002 : #4,113,000). At 30 June
2002 the Group also had a loan facility from Ford Credit Europe Bank plc of
#2,000,000 which was repaid on disposal of the motor businesses.
The analysis of net debt is as follows:
Unaudited Unaudited Audited
Half year Half year Year to
to 30 June to 30 June 31 Dec
2003 2002 2002
#'000 #'000 #'000
Cash at bank and in hand 128 143 156
Overdrafts (1,895) (4,113) (324)
---------- ------------ ---------
(1,767) (3,970) (168)
---------- ------------ ---------
Debt due within one year - (2,000) -
Debt due over one year but less than (6,000) (7,000) (6,000)
two
---------- ----------- ---------
(6,000) (9,000) (6,000)
---------- ----------- ---------
Total (7,767) (12,970) (6,168)
---------- ----------- ---------
7. The Board approved the interim accounts for the half year ended 30
June 2003 on 1 September 2003. The interim accounts for the half-year ended 30
June 2003 and the comparative figures for the half year ended 30 June 2002 are
unaudited, and have been prepared on the same basis as the accounts for the year
ended 31 December 2002. As a result the June 2002 figures have been restated for
a prior year adjustment in respect of the accounting irregularity. The full
accounts for the year ended 31 December 2002 have been filed with the Registrar
of Companies and received an unqualified audit report which did not contain a
statement under Sections 237 (2) or 237 (3) of the Companies Act 1985.
This interim report will be sent to shareholders during September. Copies will
then be available from the registered office, The Grange, 18-21 Church Gate,
Thatcham, Berkshire, RG19 3PN.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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