TIDMGBR
RNS Number : 6690N
Global Brands S.A.
06 September 2011
6 September 2011
Global Brands S.A. ("Global Brands" or the "Company")
Unaudited Interim Results for the six months ended 30 June
2011
Global Brands S.A. (AIM: GBR), an international business
developing branded food operations in Europe, including being the
master franchise owner for Domino's Pizza in Switzerland,
Luxembourg and Liechtenstein, today reports its consolidated
unaudited interim results for the six months ended 30 June
2011.
Highlights:
-- Total system sales - sales from Company-owned stores
("corporate sales") and sales by sub-franchisees - increased by
15.4% to CHF 7.66m (2010: CHF 6.64m)
-- Total revenues from sales - corporate sales and the amounts
paid to Global Brands by the sub-franchisees - increased by 11% to
CHF 7.37m (2010: CHF 6.64m)
-- Internet sales continue to grow strongly and accounted for
24.1% of corporate sales in the first half of 2011.
-- Gross profit increased 10.9% to CHF 5.35m (2010: CHF 4.82m);
despite the overall pressure on food prices, the Company achieved a
gross margin of 72.5% (2010: 72.6%)
-- Staff costs reduced by 6.8% to CHF 3.69m (2010: CHF
3.96m)
-- Administrative expenses increased by CHF 268k to CHF 2.22m
(2010: CHF 1.96m) largely due to a combination of increased royalty
costs from the increase in sales, the costs associated with the
Pizza Taxi transaction and the new corporate structure.
-- EBITDA losses of CHF 572k (2010: CHF 1.0m); an improvement of
47.9%
Current trading and Outlook:
-- July and August sales were up against tough comparatives from
the previous year and August was slightly weaker than expected due
to a combination of lower tourism levels and Ramadan running
through August this year
o Corporate store sales in July increased by 5.9% on last year
(2010: 25.9% increase)
o Corporate store sales in August decreased by 12.7% on last
year (2010: 27.6% increase)
-- Initial indications show that September is improving with
people returning from holiday and children being back at school
-- We are confident that the Company will continue to produce
strong positive sales growth for the remainder of the year
Key Developments:
-- Signed Letter of Intent ("LOI") with Dominos Pizza to acquire
Master Franchise Agreement for Austria
Simon Bentley, Chairman, commented:
"We are pleased to announce that the Company achieved double
digit sales growth for the first six months of the year despite the
difficult macro-economic environment and uncharacteristic weather
conditions. As noted in previous trading updates, the Company saw
strong sales growth in Q1, however, Q2 sales were affected by the
exceptionally warm weather conditions in Switzerland, with March to
June 2011 being the hottest months on record. We were also
particularly encouraged by the strong performance of internet sales
over both quarters.
"We believe that the Swiss business is capable of significant
growth. Trading at our existing corporate stores is expected to
pick up strongly in the autumn/winter, which is historically our
best trading period. We have also completed the conversion of the
first Pizza Taxi store into a Domino's sub-franchise store, which
is trading in line with expectations. In parallel, we will be
focusing on developing our lunchtime sales and internet business,
which we expect to show good growth in the second half of the year.
We have also taken steps to further reduce costs and have
restructured our senior operations team.
"The Board remains committed to its acquisitive growth strategy
focused on the development of new sub-franchises, new brands and
geographic expansion and we are making progress in all of these
areas. Consequently, we are pleased to announce that we have signed
a Letter of Intent (LOI) with Domino's Pizza to secure the Master
Franchise rights for Austria, which according to our research shows
strong growth potential. We expect to be in a position to sign the
Austrian MFA before 1 November 2011".
For further information:
Global Brands S.A.
Simon Bentley, Chairman Tel: (0) 20 7317 8022
www.globalbrands.ch
Libertas Capital
Thilo Hoffmann/Sandy Jamieson Tel: (0) 20 7560 9650
www.libertascapitalparterns.com
Alexander David Securities Ltd
Bill Sharp Tel: (0) 20 7448 9820
Fiona Kinghorn Tel: (0) 20 7448 9829
www.ad-securities.com
Financial Dynamics
Jonathon Brill Tel: (0)20 7831 3113
Caroline Stewart www.fd.com
Chief Executive's Review:
Overview:
I am pleased to report good results for the first half of the
2011 year. We have made progress in all of our key development
areas, despite difficult macro economic conditions and
uncharacteristic weather conditions. The continued sales growth
experienced in our corporate stores, building on a strong base last
year, is testament to our focus on operational excellence. I am
pleased that, despite tough comparatives from the previous year, we
continue to post quarter on quarter positive sales growth. Sales
for the first half of the year were up 11% on 2010, bringing the
combined year on year increase since the same period in 2009 to
31%.
We had our strongest Q1 for some time with sales up 15.5% on Q1
2010. The slower growth in Q2 was due primarily to exceptional
weather conditions in Switzerland. According to Swiss Weather
Central, March to June were the hottest months on record. In April,
sales were up 6.6% on April 2010. In May, sales were virtually flat
on last year, despite the "Mega Week" promotion, during which
almost 40% more product was sold compared to the same week last
year, with lunchtime sales up by almost 80%. Trading in June picked
up again with sales up 4% on the year. Internet sales however
bucked the general quarterly trend with Q2 sales up nearly 40% on
Q2 2010, accounting for 23.7% of corporate sales in the
quarter.
Last year we achieved H1 sales growth of 15.5% (H1 2010 versus
H1 2009) by investing substantially in marketing and training. This
year we have managed to achieve substantial incremental sales
growth (11%) with less investment, a key factor that contributed to
the substantial reduction of the H1 EDITBA loss to CHF 572k (2010:
CHF 1.0m), a 47.9% improvement on last year.
The development of our sub franchising business has been slower
than expected. We converted the first Pizza Taxi store in Reinach
to a Domino's Pizza store in June 2011. This initially resulted in
a significant improvement, with unit sales increasing by over 40%
in the first two months following conversion and we expect this
trend to continue. The cost associated with converting the
remaining two Pizza Taxi units has been continually reviewed. This
resulted in a decision to relocate the store in Basel to a new
improved location and the conversion will take place during Q4 of
this year. The remaining location in Reinfelden is being reviewed
further and a decision regarding this store will be made in the
near future.
In addition to the initial Pizza Taxi conversions, we continue
to develop a pipeline of sub-franchise opportunities and expect to
begin the process of contracting new sub-franchisees during the
second half of 2011. Our strategy involves the development of
people from within the corporate business (the most successful
source of franchise candidates in the Domino's system) as well as
strategic discussions with professional gastronomy groups in
Switzerland that have expressed strong interest.
At this time last year, we reported on the possibility of
acquiring rights to develop and operate Yo! Sushi restaurants in
Switzerland. Whilst we were disappointed not to have ultimately
acquired those rights, we remain focussed on our acquisitive growth
strategy. I am very pleased that our strong relationship with
Domino's Pizza has resulted in the LOI for Austria being signed.
Our research into the Austrian market shows strong growth potential
with substantially lower staff costs than in Switzerland. We are
excited by the prospect of developing a new Domino's Pizza
territory that is adjacent to Switzerland, with similarities in
language, culture, wealth and population. Our ability to leverage
our head office infrastructure in Switzerland, our German language
marketing and training materials and combined purchasing power will
deliver economies of scale in both territories. We anticipate that
we will be in a position to sign a full Master Franchise Agreement
with Domino's Pizza before 01 November 2011.
We will need to secure the capital necessary for the development
of the Austrian market by the end of 2011. We will be writing to
shareholders with a further update and details of the Austrian
Master Franchise Agreement at the time of closing of the
agreement.
Whilst brand diversification is an important focus for the
management team, our continued focus on Domino's Pizza remains core
to our growth strategy and I look forward to developing Austria
with both a fresh perspective on the business, as well as our
ability to apply our proven expertise.
With these anticipated developments and our continued focus on
our operations in Switzerland, there have been changes to the Board
and senior management team. We welcome Rhys Davies to the Board
following the departure of Roberto Avondo. In addition, the Board
has reorganised the management team, which resulted in the
departure of Fyl Newington as COO and the appointment of Ueli
Santchi as the country manager for Austria. We would like to thank
Fyl for his hard work and commitment in delivering the improvements
in the Company thus far. Ueli has more than 30 years experience in
the gastronomy business and joins us from Autogrill where he was
country manager for their business in Austria.
July and August sales were up against tough comparatives from
the previous year and August was slightly weaker than expected due
to a combination of lower tourism levels and Ramadan running
through August this year. Corporate store sales in July increased
by 5.9% on last year (against a 25.9% increase the previous year).
Corporate store sales in August decreased by 12.7% on last year
(against a 27.6% increase on the previous year).
Early indications are that trading in September is improving
with people returning from holiday and children being back at
school. I am confident that we will continue to produce strong
positive sales growth for the remainder of the year and
particularly in the important winter months, which is historically
our best trading period.
We continue to enjoy strong support from our staff, our key
partner, Domino's Pizza International and all of our suppliers and
shareholders, for which we are grateful.
Financial Review:
The total system sales - sales from Company-owned stores
("corporate store sales") and sales by sub-franchisees - were up
15.4% on the first six months of 2010 at CHF 7.7m. Total systems
sales for Q1 were CHF 3.9m, up 23.1% on 2010. In Q2, total system
sales were CHF 3.8m, up 8.4% on Q2 2010. Total sales for the first
quarter increased 15.5% to CHF 3.65m. Q2 sales were up 3.6% to CHF
3.6m on Q2 last year with like-for-like sales showing a 1.7%
increase on the same period last year.
Gross profit increased by 10.9% to CHF 5.34m (2010: CHF 4.82m).
This was primarily due to the 11% increase in sales revenues. Gross
Margins of 72.5% were fractionally below last year's figures of
72.6% and reflect the marginal impact of increase in food cost and
the lower margin earned during the Mega Week promotion.
Staff costs were down 6.8% at CHF 3.69m (2010: CHF 3.96m).
Direct labour costs as a percentage of sales improved to 42% (2010:
49%).
Administrative expenses increased by CHF 268k to CHF 2.22m
(2010: 1.96m) due to a combination of increased royalty costs from
the increase in sales, the costs associated with the Pizza Taxi
transaction and the new corporate structure. In addition, store
repairs increased due to the need to replace a ceiling in our
largest store.
Outlook:
For some time we have been seeking to create growth
opportunities for the business, in addition to stabilising and
growing the core corporate store operations which continue to
deliver improved results. Sub-franchising, a key part of the
strategy is developing slowly and will deliver results over the
medium term.
The opportunity to develop Austria as a new market presents an
exciting opportunity to create additional shareholder value without
the legacy issues that we have had to deal with over the last few
years in Switzerland. We know and understand how to open, operate
and manage Domino's Pizza stores successfully and when I consider
the recent developments of Domino's Pizza in Poland and Germany, I
am confident that this is the best strategy for the development of
the Company and increasing shareholder value.
I look forward to updating you further on our progress during
the rest of the year.
Bruce Vandenberg, CEO
6 September 2011
Directors
The names of the Company's directors in office during the
half-year and until the date of this report are as below. Directors
were in office for this entire period unless otherwise stated.
Simon Bentley Chairman
Roberto Avondo Non-Executive Director (resigned 31 May 2011)
Rhys Davies Non-Executive Director (appointed 1 June 2011)
Bruce Vandenberg CEO
GLOBAL BRANDS S.A. GROUP
CONSOLIDATED STATEMENT OF INCOME
unaudited unaudited audited
six month six month
period period
to to year ended
30/06/11 30/06/10 31/12/10
(Expressed in Swiss francs) Notes CHF CHF CHF
Revenue from sales 4. 7,369,992 6,639,774 13,785,403
Cost of sales (2,023,093) (1,817,163) (3,769,510)
Gross profit 5,346,899 4,822,611 10,015,893
Staff costs (3,691,987) (3,961,030) (7,653,886)
Administrative expenses (2,227,208) (1,958,988) (3,919,887)
Loss from operations before
depreciation &
amortisation (572,296) (1,097,407) (1,557,880)
Depreciation and
amortisation (255,599) (246,662) (497,081)
Operating loss before
financial costs and taxes (827,895) (1,344,069) (2,054,961)
Financial income 19,552 3,529 2,969
Finance costs (2,294) (4,148) (58,700)
Loss before income tax (810,638) (1,344,688) (2,110,693)
Deferrred tax 0 0 443,245
Loss for the period / year (810,638) (1,344,688) (1,667,447)
------------ ------------ ------------
Loss per Share 5. (0.004) (0.01) (0.01)
GLOBAL BRANDS S.A. GROUP
CONSOLIDATED BALANCE SHEET
unaudited unaudited audited
at at at
30/06/11 30/06/10 31/12/10
------------ ------------ ------------
(Expressed in Swiss francs) Notes CHF CHF CHF
ASSETS
Non-current assets
Goodwill & Intangible
assets 9 847,688 106,903 95,008
Property, plant and
equipment 1,978,509 1,751,293 1,675,204
Financial assets 210,279 180,257 185,719
Deposit re: Acquisition 0 - 782,647
Investment in Associates 20,900 - 0
Deferred tax asset 1,074,085 630,840 1,074,085
Total non-current assets 4,131,461 2,669,293 3,812,663
Current assets
Stocks 293,061 343,523 282,550
Trade and other receivables 427,896 396,382 274,850
Cash at banks and in hand 476,690 657,963 1,141,950
Total current assets 1,197,647 1,397,868 1,699,350
Total assets 5,329,108 4,067,161 5,512,013
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital 4,083,474 2,212,264 4,058,379
Share premium 3,961,611 2,657,352 3,950,824
Accumulated losses (6,810,782) (5,677,385) (6,000,145)
Equity shareholders' funds 1,234,304 (807,769) 2,009,058
Non-current liabilities
Obligations under finance
leases 206,859 34,486 32,412
Total non-current
liabilities 206,859 34,486 32,412
Current liabilities
Trade and other payables 3,169,586 4,136,547 2,760,187
Provisions for other
liabilities and charges 631,445 641,696 638,584
Obligations under finance
leases 86,914 62,201 71,772
Total current liabilities 3,887,944 4,840,444 3,470,543
Total equity and
liabilities 5,329,107 4,067,161 5,512,013
GLOBAL BRANDS S.A. GROUP
CONSOLIDATED STATEMENT OF CASH FLOWS
unaudited unaudited audited
six month six month
period period
to to year ended
30/06/11 30/06/10 31/12/10
(Expressed in Swiss francs) CHF CHF CHF
OPERATING ACTIVITIES
Cash flows applied to operating
activities before movements in
working capital (555,358) 246,410 (1,577,435)
Decrease in working capital (stocks,
receivables, payables) 238,702 374,489 (822,477)
Net cash flows applied to operations (316,656) 620,898 (2,399,912)
INVESTING ACTIVITIES
Payments to acquire offices and
stores' equipment and fixtures,
motor vehicles and software (1,087,944) (52,060) (174,445)
Acquisition of Associates (20,900)
Deposit on Subsidiary 782,648 (782,647)
Deposits repaid (made) (24,560) (4,783) (10,245)
Net Interest paid 320 252 (36,177)
Net cash flows (outflows) from
investing activities (350,436) (56,590) (1,003,514)
FINANCING ACTIVITIES
Funds raised through issuance of
shares 35,883 (762,763) 3,721,512
Payments under finance lease
obligations (34,051) (20,593) (53,147)
Net cash flows ( outflows) from
financing activities 1,832 (783,356) 3,668,365
Increase ( decrease) in cash & cash
equivalents during the year (665,260) (219,048) 264,939
Cash and cash equivalents:
- at beginning of the period / year 1,141,950 877,011 877,011
- at end of the period / year 476,690 657,963 1,141,950
Cash and cash equivalents at the end
of the period / year are represented
by :
Cash at banks and in hand 476,690 657,963 1,141,950
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Called
up share Share Accumulated Total
capital premium losses equity
(Expressed in Swiss
francs) CHF CHF CHF CHF
Balance at 31 December
2006 10,128,006 1,959,535 (5,925,178) 6,162,363
Loss for the year
ended 31 December
2007 0 0 (2,003,557) (2,003,557)
Balance at 31 December
2007 10,128,006 1,959,535 (7,928,735) 4,158,806
Loss for the year
ended 31 December
2008 0 0 (3,059,061) (3,059,061)
Balance at 31 December
2008 10,128,006 1,959,535 (10,987,796) 1,099,745
Rounding Adjustment (2) (2)
Capital Retructuring
2009 (9,669,075) 9,669,075 0
Share Issuance in 2009 1,320,000 549,225 1,869,225
Loss for the year
ended 31 December
2009 (3,013,973) (3,013,973)
Balance at 31 December
2009 1,778,931 2,508,760 (4,332,696) (45,005)
Share Issuance in 2010 2,279,448 1,442,064 3,721,512
Loss for the year
ended 31 December
2010 (1,667,447) (1,667,447)
Balance at 30 June
2010 4,058,379 3,950,824 (6,000,143) 2,009,060
Share Issuance in 2011 25,096 10,787 35,883
Loss for the six
months' to 30 June
2011 (810,638) (810,638)
Balance at 30 June
2011 4,083,475 3,961,611 (6,810,781) 1,234,305
Interim report notes:
1. Activities
Global Brands S.A. (the " Company") has the Domino's Pizza
franchise licences, concessions and rights for Switzerland,
Lichtenstein and Luxembourg. Its current activities consist of the
manufacture and sale of Domino's Pizza in Switzerland.
2. Directors' responsibility
The consolidated interim report and financial information
contained therein are the responsibility of the Board of Directors
of Global Brands S.A. The interim report was approved by the Board
of Directors on 5 September 2011. The interim report for the 6
months period to 30 June 2011 is unaudited.
The financial information relating to the year ended 31 December
2010 is extracted from the statutory audited annual accounts as
adjusted for International Financial Reporting Standards ("IFRS").
The reports of the auditors, PKF ABAX Audit, on the statutory
annual accounts and on the IFRS financial statements at 31 December
2010 were unqualified.
The statutory annual accounts for the year ended 31 December
2010, drawn up in accordance with Luxembourg law and generally
accepted accounting practices, have been delivered to the Registrar
of Trade and Companies in Luxembourg where they are available for
public inspection.
3. Basis of accounting
The consolidated interim financial statements of Global Brands
S.A. for the 6 months ended 30 June 2011 and 30 June 2010 have been
prepared using accounting policies on a basis consistent with those
adopted for the year ended 31 December 2010. Comparative figures of
prior periods (other than 30 June 2010) have been re-classified to
provide a consistent basis of comparison; these reclassifications
relate to the consolidation of the Pagonia group results following
its acquisition on 1 January 2011.
The financial statements have been prepared on the historical
cost basis. It should be noted that accounting estimates and
assumptions are used in the preparation of the financial
information. Although these estimates are based on the Directors'
and Management's best knowledge of current events and actions,
actual results may ultimately differ from those estimates.
The Company prepared its first set of IFRS compliance financial
statements for the year ended 31 December 2004.
The financial information is stated in Swiss Francs ('CHF')
which is the currency of the issued share capital of the company in
Luxembourg and the Company's functional currency.
4. Analysis of results
Revenue, operations, profits and net assets are attributable
entirely to its single business segment of selling pizzas. The
Company's turnover and trading results arises entirely in
Switzerland. Turnover and results are from continuing
activities.
The Board measures performance by using the EBITA (earnings
before interest, tax and amortization) performance measure.
5. Earnings (loss) per
share ("EPS")
The calculation of basic earnings / (loss) per share is based
on the following data:
30 June 30 June 31 December
2011 2010 2010
Number of issued shares
of CHF 0.02 each 204,173,718 110,613,217 202,918,941
------------ --------------- ------------
The weighted average number
of shares in circulation
during the period / year
is 203,466,606 104,959,442 37,050,660
------------ --------------- ------------
CHF CHF CHF
Loss for the period / year (810,638) (1,344,688) (1,667,447)
------------ --------------- ------------
Basic earnings (loss) per
share (0.004) (0.01) (0.01)
------------ --------------- ------------
The directors consider that there is no dilutive effect of share
options issued on EPS because the listed market value of the
Company's shares is substantially lower than the exercise price so
that it is most improbable that the options would be exercised at
their respective exercise prices as set out in Note 6 below.
6. Share capital and share premium :
The Company has one class of share carrying the same voting
and dividend distribution rights.
At 30 June 2011 the number of shares in circulation was 204,173,718
shares of CHF 0.02 each, giving a total subscribed and fully
paid up share capital of CHF 4,083,474.
30 June 30 June 31 December
2011 2010 2010
Share capital CHF CHF CHF
Allotted,
issued and
fully paid 4,083,474 2,212,264 4,058,379
--------- --------- -----------
Share premium
on issue of
new shares 3,961,611 2'657'352 3,950,824
Share options issued
On 1(st) August 2005, the general meeting of shareholders of the
Company approved a stock option plan for the benefit of directors
and key employees. At the AGM in 2011 the shareholders approved the
option scheme for a further 5 years. At 30 June 2011 there were in
circulation 1,849,918 options at GBP0.389, 229,467 options at
GBP0.242 and 101,871 options at GBP0.189 issued to former members
of the Board, which expire in the years 2016-2019. Additionally the
board granted 1,500,000 options at GBP0.0375 to key employees in
February 2011 and 3,000,000 options at GBP0.03 to the CEO and board
member, Bruce Vandenberg on May 27(th) , 2011. None of the options
has been exercised.
Warrants issued
As at 31 December 2010 there were 1,254,777 warrants in
circulation: 1,070,777 warrants at GBP0.018 and 184,000 warrants at
GBP0.0275 issued to the company's broker Alexander David Securities
Limited. All warrants were exercised and paid for in full on 12
April 2011.
7. Taxation
There is no taxation charge because the Company has incurred
losses in the current period and prior financial years.
8. Deferred tax asset
The Company has tax losses available to reduce taxable profits
in future periods. Having regard to the forecast of operations and
results over the years 2011-2013, the directors consider that the
potential future tax savings available in Switzerland should be
recorded in these financial statements as a deferred tax asset.
At 31 December 2010 the Directors resolved to increase the value
of the deferred tax asset and to carry forward the pre tax loss of
the years 2009 and 2010 against future available profits. No change
to the carrying value has been made at 30 June 2011.
Luxembourg tax losses incurred in respect of Luxembourg
operations have not been used to constitute a deferred tax asset
since it is uncertain when those losses may be utilised.
9. Goodwill / Acquisition of Pagonia Group
The Company acquired 100% of the share capital of Pagonia
Holding AG, the owner of the Pizza Taxi brand, on 1 January 2011
for a total consideration of CHF 744,884, paid partly in cash (CHF
488,800 and partly by the issue of 6,380,800 shares at a price of
GBP 0.0275. Acquisition costs of CHF 37,763 were also
capitalized.
Pagonia Holding AG has three 100% subsidiaries, Pizza Taxi GmbH,
Pizza Taxi Handels GmbH and Lang Tsu AG. Pizza Taxi GmbH has four
Pizza delivery franchisees in the Basel region and at least three
of these businesses will be converted into Domino's stores during
2011. The Company acquired the Pagonia Group in order to extend its
coverage in the Basel region and thereby improve both its name
recognition and turnover. In addition to the sub-franchise
contracts with the sub-franchisees, the Company acquired the assets
and liabilities of the four Swiss companies which continue to be
used within the Group as well as shareholdings in two of the
sub-franchisee companies.
The terms of the Pagonia Holding AG acquisition required the
vendors to deliver a new suitable location for the Liestal store by
28 February 2011. In the event that the vendors complied with this
condition, a further payment would have been made to them
consisting of CHF 122,200 in cash and 1,595,200 shares at a price
of GBP 0.0275. Since the vendors failed to provide a suitable
location the payment of the additional amount lapsed.
Most of the receivables acquired were trade debtors and all
receivables were stated at fair value. No contingent liabilities
were acquired.
Since acquisition the Group has generated CHF 113,396 in revenue
and made a profit of approximately CHF 20,000 from the acquired
businesses prior to their conversion to the Domino's brand.
******************
Circulation to Shareholders
Following this RNS announcement, a pdf copy of the consolidated
interim results will be placed on the Company's website
(www.globalbrands.ch). The Company's website is the primary source
of information on the Company and this includes an overview of the
activities of the Group and details on all recent Company
announcements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BRGDCLBGBGBU
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