RNS Number:8191P
Georgica PLC
16 September 2003
Georgica PLC
Georgica itself traded well during the 6 months which ended 29th June 2003: But
Megabowl traded badly. Nevertheless, Georgica's consolidated profit after tax
still improved to #558,000 (2002: loss #2,250,000).
However, variations to the Megabowl joint venture agreement with Duke Street
Capital which Georgica inherited on acquiring Allied Leisure have now been
agreed which ought to ensure the end of this unfortunate joint venture agreement
within the next few months. In essence, Georgica has been granted an option to
acquire Duke Street Capital's interest in Megabowl at an enterprise value of
approximately #74m by 8th December 2003. If Georgica does not exercise its
option Duke Street Capital have until 23rd February 2004 to acquire Georgica's
interest on the same terms. Meanwhile, negotiations will be permitted to take
place with interested third parties lest neither Duke Street Capital nor
Georgica exercise their option. Fuller details are contained in Georgica's press
release dated Tuesday 16th September 2003. A circular will be sent to Georgica's
shareholders in due course.
Our cue sports businesses performed well despite the Iraqi war, despite the
exceptionally warm and dry weather and despite the indifferent economic
conditions. Same outlet sales for the 6 months increased by 1.0%. The new format
Rileys continued to trade strongly; same outlet sales in these units rose by
17.0%. For the 6 month period, EBITDA for the cue sports businesses showed a
very marginal improvement.
Since refurbishment of the estate started in earnest at the beginning of this
year, 28 outlets have been completed of which 8 are the new format Rileys. We
expect to complete the refurbishment of a further 21 outlets by the end of this
year, 15 of which will be new format Rileys. We have contracted to acquire one
new Rileys site and progress has been made in identifying and acquiring further
sites for the Rileys expansion programme. We expect that the first new outlets
will open around the end of this year.
During July and August trade improved somewhat; same outlet sales for cue sports
rose by 3.6%. We look forward with some confidence to reporting the results of
this business as more outlets are refurbished and the estate is enlarged.
Taken as a whole trading at Allied Leisure also showed some improvement. Same
outlet sales at the Burger King businesses rose 5.7% during the period and same
outlet sales in the leisure businesses fell by only 1.2%. At the EBITDA level,
the substantial improvement at Burger King was offset by one off costs
associated with the relocation of the Allied Leisure administrative centre to
new premises at Pury Hill, Northamptonshire. In July and August same outlet
sales rose by 6.6% in the Burger King businesses and by 1.4% in the leisure
businesses.
Useful progress was made during the period in negotiations with the landlords of
certain Allied Leisure properties which have onerous leases. However, in order
for Allied to be able to continue to trade without support from Georgica, very
considerable further progress is required. Meanwhile Georgica has indicated that
it will only provide limited financial support for Allied Leisure on a month to
month basis.
Megabowl is quite another matter. Over the 6 months period same outlet sales
declined by 5.9% and in July and August same outlet sales declined by 10.3%. The
comparative figure for those bowls wholly owned by Allied were declines of 1.5%
and 2.1% respectively. Megabowl is again in breach of its loan covenants. Now
that agreement has been reached with Duke Street Capital detailed due diligence
by Georgica on Megabowl is starting at once. Georgica has already identified
numerous possible opportunities within Megabowl to enhance profitability
materially. However, Georgica will only exercise its option to acquire Duke
Street Capital's interest if, following the due diligence exercise, Georgica is
wholly satisfied that profitability at Megabowl can be materially enhanced
quickly.
Georgica continues to progress towards being a simple, profitable and
expanding company. At times progress towards these objectives has been
frustratingly slow. However, with the cue sports refurbishment and development
programme beginning to advance rapidly and the opportunity afforded by the
variations to the Megabowl joint venture agreement, your board is now looking
forward with great confidence to accelerated growth.
Donald Hanson
15th September 2003
Allied Leisure Subgroup
Franchise Leisure Allied Central Vacant properties Total Allied
Leisure
#000 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
Turnover 9,915 10,342 5,274 5,953 - - - - 15,189 16,295
EBITDA before 1,641 1,634 940 1,348 (1,302) (725) (152) (177) 1,127 2,080
rent
Rent (1,257) (1,428) (931) (1,335) (12) - (504) (478) (2,704) (3,241)
EBITDA before 384 206 9 13 (1,314) (725) (656) (655) (1,577) (1,161)
movement on
provisions
Net movement 30 10 253 308 - - 1,164 183 1,447 501
on provisions
and other non
cash items
Cost of - - - - - - - - - -
amending loan
agreements
Property - - - - - - - - - -
disposal
profit/(loss)
EBITDA 414 216 262 321 (1,314) (725) 508 (472) (130) (660)
Depreciation
- freehold - - (18) (8) - - - (1) (18) (9)
property
- long - (5) (14) (30) - - - - (14) (35)
leasehold
property
- short (227) (102) (35) (4) - - (7) - (269) (106)
leasehold
property
- fixtures, (476) (352) (146) (150) (9) - (5) (1) (636) (503)
fittings &
equipment
Total (703) (459) (213) (192) (9) - (12) (2) (937) (653)
depreciation
Operating (289) (243) 49 129 (1,323) (725) 496 (474) (1,067) (1,313)
profit /
(loss)
Net Interest - - - - (90) - - - (90) -
Write off of - - - - - - - - - -
bank charges
Profit/(loss) (289) (243) 49 129 (1,413) (725) 496 (474) (1,157) (1,313)
before
taxation
Georgica Group excluding Megabowl
Total Allied Leisure Cue Sports Overheads excluding Total Georgica
Allied excl Megabowl
#000 2003 2002 2003 2002 2003 2002 2003 2002
Turnover 15,189 16,295 28,466 28,316 - - 43,655 44,611
EBITDA before 1,127 2,080 11,951 11,839 (2,924) (2,833) 10,154 11,086
rent
Rent (2,704) (3,241) (1,633) (1,530) (77) (102) (4,414) (4,873)
EBITDA before
movement on
provisions (1,577) (1,161) 10,318 10,309 (3,001) (2,935) 5,740 6,213
Net movement on 1,447 501 5 - 811 - 2,263 501
provisions and
other non cash
items
Cost of amending - - - - (573) - (573) -
loan agreements
Property - - - - - - - -
disposal
profit/(loss)
EBITDA (130) (660) 10,323 10,309 (2,763) (2,935) 7,430 6,714
Depreciation
- freehold (18) (9) (181) (136) - - (199) (145)
property
- long leasehold (14) (35) (71) (50) - - (85) (85)
property
- short (269) (106) (1,455) (1,093) (60) (45) (1,784) (1,244)
leasehold
property
- fixtures, (636) (503) (1,351) (1,552) (120) (120) (2,107) (2,175)
fittings &
equipment
Total (937) (653) (3,058) (2,831) (180) (165) (4,175) (3,649)
depreciation
Operating profit (1,067) (1,313) 7,265 7,478 (2,943) (3,100) 3,255 3,065
/ (loss)
Net Interest (90) - - - (1,522) (1,892) (1,612) (1,892)
Write off of - - - - (149) - (149) -
bank charges
Profit/(loss) (1,157) (1,313) 7,265 7,478 (4,614) (4,992) 1,494 1,173
before taxation
Georgica Group including Megabowl
Megabowl 100% Megabowl 50% Total Georgica Total Georgica
excl Megabowl incl 50% of Megabowl
#000 2003 2002 2003 2002 2003 2002 2003 2002
Turnover 40,838 43,301 20,419 21,651 43,655 44,611 64,074 66,262
EBITDA before 10,852 11,702 5,426 5,851 10,154 11,086 15,580 16,937
rent
Rent (5,654) (5,528) (2,827) (2,764) (4,414) (4,873) (7,241) (7,637)
EBITDA before 5,198 6,174 2,599 3,087 5,740 6,213 8,339 9,300
movement on
provisions
Net movement on 740 520 370 260 2,263 501 2,633 761
provisions and
other non cash
items
Costs of - - - - (573) - (573) -
amending loan
agreements
Property 205 (2,270) 103 (1,135) - - 103 (1,135)
disposal
profit/(loss)
EBITDA 6,143 4,424 3,072 2,212 7,430 6,714 10,502 8,926
Depreciation
- freehold (140) (187) (70) (93) (199) (145) (269) (238)
property
- long leasehold (86) (125) (43) (63) (85) (85) (128) (148)
property
- short (1,188) (2,117) (594) (1,059) (1,784) (1,244) (2,378) (2,303)
leasehold
property
- fixtures, (1,888) (2,242) (944) (1,121) (2,107) (2,175) (3,051) (3,296)
fittings &
equipment
Total (3,302) (4,671) (1,651) (2,336) (4,175) (3,649) (5,826) (5,985)
depreciation
Impairment (709) - (355) - - - (355) -
Operating 2,132 (247) 1,066 (124) 3,255 3,065 4,321 2,941
profit/(loss)
Net Interest (3,215) (3,449) (1,607) (1,724) (1,612) (1,892) (3,219) (3,616)
Write off of (219) (816) (110) (408) (149) - (259) (408)
bank charges
Profit/(loss) (1,302) (4,512) (651) (2,256) 1,494 1,173 843 (1,083)
before taxation
The 2002 interim results were reported prior to the directors of Georgica
finalising the fair value of the assets and liabilities purchased with the
Allied Leisure acquisition at 9th October 2000, and the 2002 interim results
were also prior to some significant adjustments made by the directors of
Megabowl. Both of these were reflected in Georgica's financial statements for
the 52 week period ended 29th December 2002.
Megabowl interest expense excludes interest payable on loan stock. All the loan
stock is owned pro-rata to the equity by Georgica and Duke Street Capital.
Therefore the loss before tax shown is attributable to loan stock and equity
holders. The columns "Georgica excluding Megabowl" excludes interest receivable
by loan stock holders.
Rent is shown before provision release. Net interest excludes notional interest
on provisions of #700,000 (Georgica #497,000; Megabowl 50% #203,000), which has
been included within movement on provisions.
Unaudited Restated unaudited 52 weeks to 29th
26 weeks to 29th 26 weeks to 30th December 2002
June June
2003 2002
Notes
#000 #000 #000
Turnover: Group and 64,074 66,262 125,857
share of joint venture
(Megabowl)
Less: Share of turnover (20,419) (21,651) (42,002)
of joint venture
(Megabowl)
Group turnover 43,655 44,611 83,855
Cost of sales (19,043) (19,731) (38,063)
Gross profit 24,612 24,880 45,792
Other operating expenses (20,860) (21,134) (42,850)
(net)
Goodwill impairment 2 - - (3,981)
Total operating costs (20,860) (21,134) (46,831)
Group operating profit / 3,752 3,746 (1,039)
(loss)
Share of operating 4 1,269 (124) (1,218)
profit / (loss) of joint
venture (Megabowl)
Profit/(loss) on sale of - (10) 262
fixed assets
Profit / (loss) on ordinary 5,021 3,612 (1,995)
activities before finance charges
Finance charges (net) 5
Group interest (2,258) (2,563) (4,791)
Group interest 2,026 2,026 4,052
receivable from joint
venture (Megabowl)
(232) (537) (739)
Share of joint venture (3,946) (4,158) (8,511)
interest (Megabowl)
(4,178) (4,695) (9,250)
Profit/(loss) on 843 (1,083) (11,245)
ordinary activities
before taxation
Tax (charge) / credit on 6
profit on ordinary
activities
Group (285) (1,167) 2,067
Share of joint venture - - -
(Megabowl)
(285) (1,167) 2,067
Retained profit / (loss) 558 (2,250) (9,178)
for the period
Earnings / (loss) per 7
share
Basic earnings / (loss) 0.8 p (3.9) p (14.8) p
per share
Diluted earnings / 0.8 p (3.9) p (14.8) p
(loss) per share
There are no recognised gains or losses in the period other than the profit for
the period.
Turnover and other operating expenses (net) have been reclassified at June 2002
to present results consistently with the current and December 2002 presentation.
Notes Unaudited Unaudited 29th December 2002
29th June 2003 30th June 2002
#000 #000 #000
Fixed assets
Intangible fixed assets 113 - 125
Tangible fixed assets 90,463 97,099 92,714
Investments 28 - -
90,604 97,099 92,839
Investment in joint venture 4
(Megabowl)
Share of gross assets 60,390 61,692 59,624
Share of gross liabilities (87,571) (76,184) (84,128)
Share of net liabilities (27,181) (14,492) (24,504)
Share of loan stock 42,515 38,463 40,489
15,334 23,971 15,985
105,938 121,070 108,824
Current assets
Stocks 798 829 1,012
Debtors 2,732 4,214 4,784
Cash at bank and in hand 3,619 3,087 3,374
7,149 8,130 9,170
Creditors: amounts falling due 8 (16,695) (73,869) (60,087)
within one year
Net current liabilities (9,546) (65,739) (50,917)
Total assets less current 96,392 55,331 57,907
liabilities
Creditors: amounts falling due
after
more than one year (42,019) (258) (174)
Provisions for liabilities and 9 (9,396) (15,038) (12,847)
charges
Net assets 44,977 40,035 44,886
Capital and reserves
Called up share capital 10 4,626 3,997 4,658
Special capital reserve 10 49 - 27
Capital redemption reserve 10 31 206 21
Share premium account 10 13,240 1,132 13,240
Merger reserve 10 56,882 56,882 56,882
Profit and loss account 10 (29,851) (22,182) (29,942)
Shareholders' funds - equity 44,977 40,035 44,886
interests
Consolidated cash flow statement
Unaudited Unaudited 52 weeks to
26 weeks to 29th June 26 weeks to 30th June 29th December 2002
2003
Note 2002
#000 #000 #000
Net cash inflow from 3,259 2,144 2,991
operating activities
Returns on investments (1,803) (2,338) (3,231)
and servicing of finance
Taxation 32 946 2,471
Capital expenditure and (1,950) 35 (446)
financial investment
Cash (outflow) / inflow (462) 787 1,785
before management of
liquid resources and
financing
Financing 6,131 (285) (3,994)
Increase / (decrease) in 11 5,669 502 (2,209)
cash in the period
Reconciliation of operating profit to operating cash flows
Unaudited Unaudited 52 weeks to
26 weeks to 29th June 26 weeks to 30th June 29th December 2002
2003 2002
#000 #000 #000
Operating profit / (loss) 3,752 3,746 (1,039)
Depreciation and 4,187 3,649 8,464
amortisation charges
Impairment of fixed assets - - 342
Goodwill impairment 2 - - 3,981
Decrease in stocks 214 290 117
Decrease / (increase) in 1,818 (7) (118)
debtors
Decrease in creditors (2,706) (3,291) (3,901)
Movement in provisions, (1,948) (1,172) (3,751)
excluding payments on
surrender of onerous leases
Change in balance with joint (58) (1,071) (1,104)
venture
Operating cash inflow before 5,259 2,144 2,991
settlement of onerous leases
Payments on surrender of (2,000) - -
onerous leases
Net cash inflow from 3,259 2,144 2,991
operating activities
1 Basis of preparation
The financial information in this report incorporates the consolidated results
of Georgica and all its subsidiary undertakings (together "the group") for the
26 week period ended 29th June 2003. The group's 50 per cent investment in
Megabowl Group Limited ("Megabowl") is treated as a joint venture. The group
unaudited profit and loss account includes the appropriate share of the results
of Megabowl. The group's share of the gross assets and gross liabilities of
Megabowl are shown in the unaudited consolidated balance sheet.
The accounting policies for all periods are in accordance with those set out in
the Georgica annual report for the period ended 29th December 2002. The Georgica
accounts for the period ended 29th December 2002 carry an unqualified audit
opinion and have been filed with the Registrar of Companies.
The interim financial information is unaudited and has not been reviewed by the
company's auditors.
The financial information does not amount to full accounts within the meaning of
Section 240 of the Companies Act 1985 (as amended).
This report was approved by the directors on 15th September 2003.
2 Goodwill impairment
The June 2002 comparative figures were based upon the provisional estimates of
the fair value of assets and liabilities purchased within the Allied Leisure
Limited acquisition. In the light of additional information the fair values were
reviewed during 2002 and adjustments reflected in the financial statements for
the 52 weeks ended 29th December 2002. The directors reviewed the goodwill
arising upon the acquisition of Allied Leisure Limited and concluded that the
goodwill was impaired. The total goodwill arising was #16,492,000 of which
#3,981,000 was charged to the profit and loss account in the 52 weeks ended 29th
December 2002 (2001: #12,511,000).
3 Allied Leisure
Certain subsidiary companies within the former Allied Leisure group have been,
and may continue to be, reliant on financial and administrative support from
Georgica PLC although no guarantee of future financial support has been
provided. The directors of Georgica PLC have considered the ability of Allied
Leisure Limited and its subsidiaries to continue as a going concern and have
resolved to continue supporting Allied Leisure Limited and its subsidiaries for
the time being but this situation is subject to review at any time. The
unaudited profit and loss account and unaudited balance sheet of Allied Leisure
Limited and its subsidiaries have been prepared on the going concern basis for
the purposes of inclusion in the interim financial information. Accordingly the
interim financial information does not include any adjustments in respect of
these subsidiaries that would result from a withdrawal of financial support. At
29th December 2002 a provision of #823,000 remained against a potential
shortfall in realisable value of the net assets of Allied Leisure. This
provision has been released (52 weeks to 29th December 2002; #1,177,000 release)
as the potential shortfall no longer exists as Allied Leisure's liabilities
exceeded its assets at the 29th June 2003. Accordingly Georgica's consolidated
net assets are reduced by the inclusion of Allied's net liabilities at the 29th
June 2003.
4 Megabowl
Megabowl has been included under the gross equity accounting method and
Georgica's share of the gross assets and gross liabilities are included in the
balance sheet at their fair values at the date of acquisition of Allied Leisure
Limited plus Georgica's share of the results since acquisition.
As stated in note 2 during 2002 the directors reviewed Georgica's share of the
fair value of assets and liabilities acquired as part of the Allied Leisure
Limited acquisition in 2000, and the value of Megabowl was reduced by #4,564,000
in the financial statements for the 52 weeks ended 29th December 2002.
Megabowl has breached certain banking and mezzanine covenants at 29th June 2003
resulting in its loans becoming payable on demand. Georgica's directors, having
agreed the variation to the joint venture agreement referred to in the
Chairman's Statement, believe it is likely that Megabowl will be refinanced and
that no impairment in the carrying value of Megabowl is currently required. In
the event that Georgica does not exercise its option to acquire Duke Street
Capital's interest it is likely that an impairment charge will be recognised.
5 Finance charges (net)
Unaudited Unaudited 52 weeks to 29th December 2002
26 weeks to 26 weeks to
29th June 2003 30th June 2002
#000 #000 #000
Finance charges (net)
Interest payable and similar (5,748) (6,098) (11,914)
charges
Less: interest income 2,067 2,074 4,173
Notional interest on provisions (497) (671) (1,509)
(4,178) (4,695) (9,250)
Group (2,258) (2,563) (4,791)
Group interest receivable from 2,026 2,026 4,052
joint venture (Megabowl)
(232) (537) (739)
Share of joint venture (Megabowl) (3,946) (4,158) (8,511)
(4,178) (4,695) (9,250)
6 Tax on profit on ordinary activities
The tax charge for the period to 29th June 2003 is based on the tax charge
expected to apply for the 52 weeks ending 28th December 2003. The charge in the
period relates only to deferred tax.
7 Earnings / (loss) per share
The calculation of basic earnings per share is based on the profit attributable
to ordinary shareholders divided by the weighted average number of shares in
issue during the period.
The potential dilutive effect of the shares held by the Georgica Share Incentive
Plan Limited, and the assumed conversion of convertible ordinary shares and
reconciliation of profits and losses are set out below. Where the result for the
period is a loss, the diluted loss per share is restricted to the basic loss per
share.
Profit / (loss) for the period Earnings / (loss) per share
Unaudited Unaudited 52 weeks Unaudited Unaudited 52 weeks
26 weeks to 26 weeks to to 26 weeks to 26 weeks to to
30th June 29th 30th June 29th
29th June 2002 December 29th June 2002 December
2003 2002 2003 2002
#000 #000 #000
Basic 558 (2,250) (9,178) 0.8p (3.9)p (14.8)p
Diluted 558 (2,250) (9,178) 0.8p (3.9)p (14.8)p
Unaudited Unaudited 52 weeks to 29th December 2002
26 weeks to 26 weeks to
29th June 2003 30th June 2002
Weighted average number of
shares:
Basic 71,659,094 58,068,995 62,063,046
Dilutive effect of shares held 727,470 1,643,191 1,175,680
by the Georgica Share Incentive
Plan Limited and convertible
ordinary shares
Fully diluted 72,386,564 59,712,186 63,238,726
8 Creditors - amounts falling due within one year
All bank loans fell due for repayment within one year at 30th June 2002 while a
new facility was being finalised with the existing bank syndicate; the new
facility was executed on 29th July 2002. At 29th December 2002 the debt was
repayable on demand as one of the three banking covenants had been breached by
approximately 3%. Amended bank loan agreements were executed on 10th April 2003,
and all debt is repayable up to 29th July 2005.
9 Provision for liabilities and charges
Unaudited Unaudited 52 weeks to 29th December 2002
26 weeks to 26 weeks to
29th June 2003 30th June 2002
#000 #000 #000
Provision for onerous contracts:
Opening provision 12,847 13,419 13,419
Utilisation in the period (3,028) (1,172) (3,437)
Charged to profit and loss account 374 - -
Released unused (1,294) - (314)
Notional interest charged in the 497 671 1,509
period
Fair value adjustment - - 1,670
Closing provision 9,396 12,918 12,847
Deferred tax closing provision - 2,120 -
Total provisions 9,396 15,038 12,847
10 Reconciliation of movements in reserves and shareholders' funds
Called-up Special Capital Share Merger Profit and Total
share capital redemption premium reserve loss shareholders'
capital reserve reserve account account account funds
Group #000 #000 #000 #000 #000 #000 #000
At 30th 4,658 27 21 13,240 56,882 (29,942) 44,886
December 2002
Shares (22) 22 - - - (381) (381)
cancelled
under Scheme
of Arrangement
Buy back of (10) - 10 - - (86) (86)
ordinary
shares
Profit for the - - - - - 558 558
period
________ ________ _________ ________ ________ ________ _________
At 29th June 4,626 49 31 13,240 56,882 (29,851) 44,977
2003
________ ________ _________ ________ ________ ________ _________
Reconciliation of movements in group shareholders' funds
Unaudited Unaudited 29th December 2002
29th June 2003 30th June 2002
#000 #000 #000
Profit / (loss) for the financial period 558 (2,250) (9,178)
Buyback and cancellation of own shares (467) - (832)
New shares issued - - 12,611
_________ _________ _________
Net additions / (reduction) to shareholders' funds 91 (2,250) 2,601
Opening shareholders' funds 44,886 42,285 42,285
_________ _________ _________
Closing shareholders' funds 44,977 40,035 44,886
_________ _________ _________
11 Analysis and reconciliation of net debt
30th December 2002 Cashflow Other non-cash Unaudited
changes 29th June 2003
#000 #000 #000 #000
Cash in hand, at bank 3,374 245 - 3,619
Overdrafts (6,538) 5,424 - (1,114)
(3,164) 5,669 - 2,505
Debt due after one year - (42,019) - (42,019)
Debt due within one (37,540) 35,429 (149) (2,260)
year
Finance leases (158) 79 - (79)
(37,698) (6,511) (149) (44,358)
Net debt (40,862) (842) (149) (41,853)
Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited 52 weeks to 29th December 2002
26 weeks to 26 weeks to
29th June 2003 30th June 2002
#000 #000 #000
Increase / (decrease) in cash in 5,669 502 (2,209)
the period
Cash (inflow) / outflow from (6,511) 357 14,897
(increase) / reduction in debt and
lease financing
Change in net debt resulting from (842) 859 12,688
cashflows
Issue costs of new facility - - 876
Amortisation of issue costs (149) - (155)
Movement in net debt in period (991) 859 13,409
Opening net debt (40,862) (54,271) (54,271)
Closing net debt (41,853) (53,412) (40,862)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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