RNS Number : 3497U
Global Brands S.A.
13 May 2008
14 May 2008
Global Brands S. A. (the"Company")
Audited Results for the year ended 31 December 2007
CHAIRMAN'S REPORT
Global Brands S.A. ("Global Brands" or the "Company") is the exclusive master franchisee of Domino's Pizza in Switzerland, Luxembourg
and Liechtenstein.
Domino's Pizza Inc. ("Domino's") was founded in the United States of America in 1960 and is the world's leading pizza delivery brand
with over 8,500 stores in more than 50 countries.
Our Company is traded on the AIM, a market operated by the London Stock Exchange under the company code "GBR". The share price and
regulatory information are available on the Company's website www.globalbrands.ch.
On 12 February 2008, the Company announced the completion of the sale of 2,505,860 ordinary shares of CHF 2.10 to the Luxembourg
registered Belvia s.r.l. ("Belvia"), representing 51.96 per cent of the issued share capital of the Company. Following a meeting of the
Board of Directors, both Mr. Yossi Moldawsky, Executive Chairman, and Mr. Dov Lachovitz, Chief Executive Officer, resigned from the Board
with immediate effect. Simultaneously, the Directors announced the immediate appointment of Mr. Yair Hasson and Mr. Roberto Avondo to the
Board as Executive Chairman and Executive Vice Chairman, respectively. In addition, Mr. Amir Hasson was appointed as the Company's CEO. On 6
March 2008, Mr. Christopher Bodker resigned as non executive director.
On 31 January 2008, Zimmerman Adams International Ltd replaced Ruegg & Co Ltd as our Nominated Adviser on the AIM.
Operating and financial highlights.
The Company announces its annual results for the year ending 31 December 2007.
2007 marked the beginning of a turnaround for the Company. The sustained growth in revenues during the year, a decrease in expenses as
well as the benefits of management's decisions to discontinue two unprofitable stores, resulted in a significant improvement in the
Company's EBITDA (earnings before interest, tax, depreciation and amortisation).
Revenue growth was driven by the launch of the new "Dominator" pizza (a large extra thin crust base) which attracted strong demand from
customers, the continued investment in marketing and brand awareness both offline and on-line, and a focus on offering quality products and
services to customers.
By the end of 2007, the Company with its ten stores, was the only pizza delivery chain with a national presence in Switzerland and the
only international pizza delivery brand in Switzerland. By the end of the period, these ten stores all had positive EBITDA.
Key trading figures
The annual turnover of the Company rose by 4.1% to CHF 10.9 million from CHF 10.5 million in 2006. Excluding the effect of the two
discontinued stores, the closing of which were largely responsible for the accelerated depreciation charge in the accounts, same stores
sales (being sales from stores that have been operational for more than a year) continued to grow with sales increasing by 7.1% over the
same period last year.
The Company increased its gross profit by 3.9% to CHF 8.5 million. Reductions in staff costs and administrative expenses led to a
significant improvement in operational costs resulting in an EBITDA loss of CHF 476,796, a 55.9 % improvement on 2006.
In addition, and as a matter of prudence, the new management has decided to make a provision of CHF 804,732 in respect of potential
liabilities relating to prior events. The actual liabilities are still under negotiation but the provision reflects the maximum potential
liabilities. (Please see the Directors' Report for further details).
After taking into account financial income, deferred tax credit, depreciation and the provisions, the final result for the year is a
loss of CHF 2,003,557 (2006: loss of CHF 1,313,820) with the loss per share ('EPS') increasing from CHF 0.27 to CHF 0.42. Without the above
provisions of CHF 804,732, the loss per share would have amounted to CHF 0.25.
The Company's cash position remains strong with net cash of CHF 2.8 million as at end of the period with no loan debt.
Current trading and outlook
The new management team is committed to achieving further improvement in turnover and cost reductions in 2008 and early trading
indications are promising.
Revenues are marginally up in the first two months of the financial year compared to the same period in 2007. Excluding the effect of
the two discontinued stores, revenues from same stores are up more than 6.6% and online orders continue to grow, compared with the same
period last year.
The Company is currently negotiating an additional 4-5 potential locations for further openings in 2008 which are expected to contribute
to revenue growth. Over the longer term, the Company intends to accelerate its pace of development and is targetting 30 branches in
operation by 2010, including new branches in Luxembourg and Liechtenstein.
The new development plan is based on modifying the current business model from running exclusively Company-owned branches to
sub-franchisees operated branches. It also seeks to develop and capitalise on a closer working relationship with Domino's International. The
implementation of sub-franchises has been successfully introduced in other parts of the world and this is especially true of the United
Kingdom where almost all branches are run by sub-franchisees.
Your Directors intend to identify potential sub-franchisees able to own and manage Domino's branches. It is vital that the Company has a
system capable of providing potential sub-franchisees with good operational, marketing and logistical support over and above the
infastructure required to control and supervise the activities of these sub-franchisees. At the same time, the new management team will give
greater emphasis to recruitment and training whilst investing in marketing to raise brand awareness.
In addition, opportunities for expansion outside the current franchise areas will be investigated with the view of expanding, within the
fast food sector, in other European countries.
Finally, I would like to thank the management team and staff for their contribution and dedication and look forward to the development
of our Company together.
13 May April 2008
Yair Hasson
Chairman
STATEMENT OF INCOME
(Expressed in Swiss francs) 2007 2006
Notes CHF CHF
Revenue from sales 6 10,932,589 10,499,573
Cost of sales (2,414,487) (2,300,387)
Gross profit 8,518,102 8,199,186
Staff costs 8 (5,271,767) (5,545,081)
Administrative expenses 9 (3,723,131) (3,735,887)
Loss from operations before depreciation & (476,796) (1,081,782)
amortisation
Depreciation and amortisation 13 & 14 (1,045,502) (557,373)
Loss from operations before financial result (1,522,298) (1,639,155)
Interest and financial income 10 106,939 157,317
Interest and financial charges 11 (67,457) (35,350)
Loss on ordinary activities 6 (1,482,816) (1,517,188)
Charges in relation with (99,627) (291,330)
extension of the business
Provisions for charges 22 ( 824,732) (90,000)
Deferred tax credit 16 403,618 584,698
Loss for the year (2,003,557) (1,313,820)
Basic earnings / (loss) per 7 (0.42) (0.27)
share
The accompanying notes form an integral part of these financial statements.
BALANCE SHEET
(Expressed in Swiss francs) 2007 2006
Notes CHF CHF
ASSETS
Non-current assets
Intangible assets 13 174,327 210,685
Property, plant and equipment 14 2,394,670 2,903,158
Financial assets 15 145,171 94,315
Deferred tax asset 16 1,136,618 733,000
Total non-current assets 3,850,786 3,941,158
Current assets
Stocks 17 227,748 214,974
Trade and other receivables 18 150,760 124,855
Cash at banks and in hand 2,775,455 4,358,814
Total current assets 3,153,963 4,698,643
Total assets 7,004,749 8,639,801
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital 19 10,128,006 10,128,006
Share premium 19 1,959,535 1,959,535
Accumulated losses (7,928,735) (5,925,178)
Shareholders' equity 4,158,806 6,162,363
Non-current liabilities
Obligations under finance 20 15,257 61,037
leases
Total non-current liabilities 15,257 61,037
Current liabilities
Trade and other payables 21 1,870,174 2,273,630
Provisions for other 22 914,732 90,000
liabilities and charges
Obligations under finance 20 45,780 52,771
leases
Total current liabilities 2,830,686 2,416,401
Total equity and liabilities 7,004,749 8,639,801
The accompanying notes form an integral part of these financial
statements.
STATEMENT OF CASH FLOWS
(Expressed in Swiss francs) 2007 2006
Notes CHF CHF
OPERATING ACTIVITIES
Net cash flows applied to operations 27 (1,083,600) (622,335)
INVESTING ACTIVITIES
Payments to acquire fixtures, equipment (500,656) (1,269,941)
motor vehicles and software
Interest received 106 939 112,006
Deposits (made) repaid (50,856) (3,513)
Net cash flows (outflows) from investing (444,573) (1,161,448)
activities
FINANCING ACTIVITIES
Payments under finance lease obligations (52,771) (78,484)
Interest paid (2,415) (7,782)
Net cash flows ( outflows) from financing (55,186) (86,266)
activities
Increase ( decrease) in cash & cash (1,583,359) (1,870,049)
equivalents during the year
Cash and cash equivalents:
- balance at beginning of the year 4,358,814 6,228,863
- balance at end of the year 2,775,455 4,358,814
Increase ( decrease) in cash & cash (1,583,359) (1,870,049)
equivalents during the year
Cash and cash equivalents are represented
by :
Cash at banks and in hand 2,775,455 4,358,814
Due to banks - -
Net cash and cash equivalents at end of 2,775,455 4,358,814
the year
STATEMENT OF MOVEMENTS IN SHAREHOLDERS' EQUITY
Called up share capital Share premium Accumulated losses Total
(Expressed in Swiss francs) CHF CHF CHF CHF
Balance at 31 December 2005 10,128,006 1,959,535 (4,611,358) 7,476,183
Loss for the year 31 December - (1,313,820) (1,313,820)
2006
Balance at 31 December 2006 10,128,006 1,959,535 (5,925,178) 6,162,363
Loss for the year 31 December - - (2,003,557) (2,003,557)
2007
Balance at 31 December 2007 10,128,006 1,959,535 (7,928,735) 4,158,806
NOTES TO THE FINANCIAL STATEMENTS
1 Statutory
information
Global Brands S.A. (the " Company") was incorporated under the laws of Luxembourg on
July 6, 1999 by notary act prepared by Maitre Alex Weber, notary residing in
Luxembourg. The act was published in the legal gazette, the Morial C N° 723 of 29
September 1999. The Company is registered under number B 70673 at the Register of
Commerce and Societies in Luxembourg (Registre de Commerce et des Sociés (R.C.S.))
The registered office is in Luxembourg. A branch has been opened in Switzerland where
it carries on its principal trading activity.
2 Activities
The Company has acquired the Domino's franchise licences, concessions and rights for
Switzerland, Lichtenstein and Luxembourg. Its current activities consist of the
promotion, manufacture and sale of Domino's Pizza.
3 Directors'
responsibility
The annual report and financial statements drawn up under IFRS were approved by the
Board of Directors on 13 May 2008. They may be changed only by the Board of Directors
and are not subject to approval by shareholders.
The statutory annual accounts for the year ended 31 December 2007 are drawn up in
accordance with Luxembourg law and they will be submitted to shareholders for approval
at the annual meeting to be held on 2 June 2008. Statutory annual accounts for the
year ended 31 December 2006 have been approved by shareholders and have been filed at
the R.C.S. in Luxembourg.
4 Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") under the historical cost convention using
accounting policies on a basis consistent with those adopted for the prior year, and
on a going concern basis.
The Company prepared its first set of IFRS compliance financial statements for the
year ended 31 December 2004. Adjustments have been made to the numbers presented in
the local statutory annual to comply with IFRS. The adjustments relate to accounting
for :
· deferred tax asset which was created to recognise the future benefits of tax
losses, but is not allowed under Luxembourg law;
· capital issue costs are charged against the share premium account, whereas
Luxembourg local accounting policy is to capitalize and amortise these costs over 5
years.
The financial statements are stated in Swiss Francs ('CHF') which is the currency of
the issued share capital of the Company and the Company's functional currency.
Comparative figures
In instances where reclassification of amounts has been made, comparative figures for
the previous year have been modified to provide a comparable basis. These
reclassifications have no effect on the results and net equity.
Use of estimates
Accounting estimates and assumptions are used in the preparation of these financial
statements, notably in respect of depreciation and amortisation of fixed assets,
provisions for uncollectible amounts, valuation of stocks and provisions for charges.
These estimates are based on the directors' best knowledge of current events and
actions, although actual results may ultimately differ from those estimates.
Going concern
The financial information has been prepared on the basis that the Company will
continue as a going concern for the foreseeable future. In forming this opinion, the
directors have prepared the Company's budgets for 2008 to 2010 and formulated its
medium term plans.
5 Summary of significant accounting policies
Revenue recognition
Sales revenue is the amount receivable by the Company for goods supplied and services
provided, excluding VAT and trade discounts. Revenue is recognised when goods are
delivered and title has passed.
Interest income is accrued on a time basis by reference to the principal outstanding
and the interest rate applied.
Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Depreciation is calculated to write down the cost
less estimated residual value of all property, plant and equipment by equal annual
instalments over their expected useful lives. Land is not depreciated.
The expected useful lives generally applicable are:
Fixtures, fittings and stores equipment: 6 to 10 years, or over the life of the
store lease.
Furniture and office equipment: 3 to 4 years.
Motor vehicles: 3 to 7 years.
Fixtures, fittings and stores equipment are depreciated initially over the primary
life of the lease , normally 5 to 6 years. In the event that leases are renewed and
extended, depreciation is re-calculated over the extended period of the lease.
Leased assets
Leases are classified as finance leases when the terms of the lease transfer
substantially the economic ownership of the asset to the lessee. Assets held under
finance leases and hire purchase contracts are capitalised in the balance sheet and
depreciated over their expected useful lives. They are capitalised at their fair value
at the date of acquisition, or if lower, at the present value of the minimum lease
payments. The interest element of leasing payments representing a constant proportion
of the capital balance outstanding is charged to the profit and loss account over the
period of the lease.
All other leases are regarded as operating leases and the payments made under them are
charged to the profit and loss account on a straight line basis over the term of the
lease.
Intangible assets
Intangible assets acquired are stated at cost less accumulated amortisation and
impairment losses. Subsequent expenditure on capitalised intangible assets is
capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is expensed as incurred.
Amortisation is charged on a straight-line basis over the estimated useful economic
life and charged from the date the asset is available for use. The useful lives are
estimated as follows:
Licences: 15 years, being the period of the operating franchise licence
Software: 2 to 3 years
The carrying values are reviewed at each balance sheet date to determine whether there
is any indication of impairment. If any such indication exists, the recoverable amount
is estimated. An impairment loss is recognised whenever the carrying value of the
asset or its cash-generating unit exceeds its recoverable amount. Impairment losses
are charged to the income statement.
Financial assets
Financial assets representing guarantee bank deposits are stated at fair values.
Deferred taxation
Deferred tax payable is provided using the liability method on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial information
tables. The principal temporary differences arise from depreciation of property, plant and equipment, tax losses carried forward and
on the difference between the fair values of the net assets
acquired and their tax base.
Deferred tax is provided for using the tax rates estimated to arise when the timing differences reverse and is accounted for to
the extent that it is probable that a liability or asset will
crystallise.
Non-provided deferred tax is disclosed as a contingent liability.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be sufficient and available
against which the existing tax losses can be utilised. Deferred
tax assets are reviewed at each balance sheet
date to determine the expected timing of their realisation.
Stocks
Stocks are stated at the lower of cost and net realisable value, after making allowance for obsolete and slow moving items. Cost of
raw materials, finished goods and consumables comprises the
invoiced value of the goods.
Debtors and receivables
Debtors and receivables are stated at their
nominal value, less provision for estimated irrecoverable amounts.
Financial instruments
The Company's financial instruments consist of long term bank deposits, cash, bank current accounts, short term bank deposits, trade
receivables, other receivables, accrued income, trade payables,
obligations under finance lease contracts, loans, other accounts payable and accrued liabilities. The fair value of
the financial instruments approximates their carrying values.
Foreign currency
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and
liabilities in foreign currencies are translated at the rates of
exchange ruling at the balance sheet date. Any gain or loss arising from a change in exchange rates subsequent to the date of the
transaction is included as an exchange gain or loss in the profit
and loss account.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, balances with banks and short term deposits with original maturities of three months or
less. Bank guarantee deposits are considered to be investing
activities; bank borrowings are considered to be financing activities.
Liquid funds assets are placed with recognised banks in Switzerland and Luxembourg and the balances represent their fair value.
Short term bank overdrafts are obtained to meet working capital
needs.
Trade payables
Trade payables are stated at their nominal amounts.
Borrowings
Loans and bank overdrafts are recorded at the proceeds amount. Interest and financial charges, including premiums payable on repayment,
are accounted for on an accrual basis and are added to the
amount of the debt.
Interest expense is accrued on a time basis by reference to the principal outstanding and the interest rate applied.
Pension schemes
The Company makes contributions to the personal pension plans of certain employees. Contributions are charged to the profit and loss
account. The
Company does not operate a defined pension contribution scheme or defined pension benefit scheme for its employees and directors
Revenues and results
6
Business segment
Turnover, operations, profits and net assets are attributable entirely to continuing activities from its single business segment of
selling pizzas. The Company's turnover and
trading results arise entirely in Switzerland.
Geographical segment:
Turnover and results are attributable primarily to Switzerland. There are no trading revenues in Luxembourg.
The loss on ordinary activities before taxation
is stated after charging or crediting:
2007
2006
CHF
CHF
Depreciation of:
-property, plant 921,384
430,439
and equipment owned
-property, plant 79,531
92,400
and equipment under
finance leases
Amortisation of 44,588
34,534
intangible fixed
assets
Included in
administration
expenses are:
-operating lease 396,968
379,244
rentals
-auditors' 42,900
38,640
remuneration - audit
services
Foreign currency ( (42,848)
45,311
loss ) gain
7 Earnings (loss) per share (EPS)
The calculation of the basic earnings per share is determined on the loss attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year. The
elements used in the calculation are:
2007
2006
Number of issued shares of CHF 2.10 each 4,822,860
4,822,860
The weighted average number of shares in circulation during the year was : 4,822,860
4,822,860
CHF
CHF
Loss for the year (2,003,557)
(1,313,820)
Basic earnings (loss) per share (0.42)
(0.27)
The directors consider that there is no dilutive effect of share options issued because the market price of the shares is substantially
lower than the exercise price so that it is most improbable
that the options would be exercised in the foreseeable future at their exercise price of £ 1.85, £1.15 and £0.90.
8 Staff costs 2007
2006
CHF
CHF
Wages and salaries 4,735,545
4,993,538
Social security and state pension costs 475,142
498,577
Other staff costs 61,080
52,966
5,271,767
5,545,081
Social security costs comprise the Company's legal obligations to contribute to the Swiss State national health
and pension funds and private pension plans of certain
employees.
2007
2006
Remuneration in respect of directors CHF
CHF
included therein amounted to:
Emoluments 625,692
509,304
Social security and pension contributions -
-
625,692
509,304
There is no Company pension scheme in
force for the directors.
Remuneration to key members of management 320,829
280,612
amounted to:
The average number of employees by N°
N°
category was:
Production and sales distribution 248
289
Administration 5
6
253
295
9 Administrative expenses 2007 2006
CHF CHF
Marketing costs and royalties 1,051,558 1,188,151
Administration and general expenses 2,671,573 2,547,736
3,723,131 3,735,887
10 Interest and financial income 2007 2006
CHF CHF
Bank interest income 106,939 112,006
Foreign currency gains - 45,311
106,939 157,317
11 Interest and financial charges 2007 2006
CHF CHF
Finance lease interest 2,415 7,782
Foreign currency losses 42,848 -
Other financial charges 22,194 27,568
67,457 35,350
12 Income tax expense
The Company is fully taxable in Luxembourg and Switzerland on profits realised from its operations. There
were no taxable profits attributable to Luxembourg during the above years. There is no taxation charge
because the Company has incurred tax losses.
There were no taxable profits attributable to Luxembourg during the above years.
2007 2006
Swiss tax losses CHF CHF
available are as
follows
Loss for the year (2,003,557) (1,313,820)
before tax
Swiss tax rate 25% 25%
Expected tax expense - -
The effective tax 2007 2006
rates on profits
are:
Luxembourg 29.63% 29.63%
Switzerland 25.00% 25.00%
13 Intangible fixed assets
Software Licences Total
Year 2007 CHF CHF CHF
Gross carrying amount at cost at 01/01/2007 91,265 353,901 445,166
Additions 8,230 - 8,230
Gross carrying amount at 31/12/2007 99,495 353,901 453,396
Accumulated amortisation brought forward (67,867) (166,614) (234,481)
Amortisation charge for the year (20,161) (24,427) (44,588)
Accumulated amortisation at end of year (88,028) (191,041) (279,069)
11,467 162,860 174,327
Net book value at 31/12/2007
Year 2006 :
Gross carrying amount at cost at 01/01/2006 58,487 353,901 412,388
Additions 32,778 - 32,778
Gross carrying amount at 31/12/2006 91,265 353,901 445,166
Accumulated amortisation brought forward (58,486) (141,461) (199,947)
Amortisation charge for the year (9,381) (25,153) (34,534)
Accumulated amortisation at end of year (67,867) (166,614) (234,481)
23,398 187,287 210,685
Net book value at 31/12/2006
Licences include an initial payment of CHF 328,901 to acquire the operating franchise licence ''Dominos Pizza'' for a period of 15 years
in Luxembourg, Liechtenstein and Switzerland. At 31 December 2007, the licence has a remaining life of 7 years.
14 Property, plant and equipment
Fixtures, fittings & Office furniture & Motor vehicles Total
store equipment equipment
Year 2007 CHF CHF CHF CHF
Gross carrying amount at cost at 01/01/2007 3,707,131 337,477 739,193 4,783,801
Additions 368,477 39,130 84,820 492,427
Gross carrying amount at 31/12/2007 4,075,608 376,607 824,013 5,276,228
Less accumulated depreciation (1,204,770) (229,679) (446,194) (1,880,643)
- brought forward
- depreciation charge for the year (791,372) (60,748) (148,795) (1,000,915)
-accumulated depreciation at 31/12/2007 (1,996,142) (290,427) (594,989) (2,881,558)
2,079,466 86,180 229,024 2,394,670
Net book value at 31/12/2007
Year 2006
Gross carrying amount at cost 2,612,229 288,777 645,632 3,546,638
at 01/01/2006
Additions 1,094,902 48,700 93,561 1,237,163
Gross carrying amount at 3,707,131 337,477 739,193 4,783,801
31/12/2006
Less accumulated depreciation (868,685) (166,387) (322,732) (1,357,804)
- brought forward
-depreciation charge for the (336,085) (63,292) (123,462) (522,839)
year
- accumulated depreciation at (1,204,770) (229,679) (446,194) (1,880,643)
31/12/2006
2,502,361 107,798 292,999 2,903,158
Net book value at 31/12/2006
The depreciation charge figure for fixtures, fittings & store equipment includes an exceptional impairment charge of CHF 367,137 in 2007
in respect of write-off of installations relating to the closing of the stores in Luzern and Biel.
The net carrying amount of assets held under finance leases amounted to: 2007 2006
CHF CHF
Equipment 73,359 100,174
Motor vehicles 92,588 145,304
Total 165,947 245,478
15 Financial assets 2007 2006
CHF CHF
Bank guarantee 145,171 94,315
deposits
Deposits are made with the Company's bankers as guarantees for lease of premises, stores and vehicles.
They are stated at fair values.
16 Deferred tax asset 2007 2006
CHF CHF
Balance at beginning 733,000 148,302
of year
Deferred tax credit 403,618 584,698
(charge) for the
year
Balance at end of 1,136,618 733,000
year
The Directors have resolved to continue to recognise the deferred tax asset created in
prior years since they are confident that, based on budgets and forecasts over the
years 2008-2010, sufficient profits will be generated during those years to allow
Swiss tax losses to be offset against them.
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.
2007 2006
CHF CHF
Swiss tax losses 4,546,472 2,932,000
available to set off
against future
profits amount to:
Deferred tax asset 1,136,618 733,000
on Swiss tax losses
at a tax rate of 25%
Luxembourg tax losses accumulated to the year ended 31 December 2006 and confirmed by
the Luxembourg tax office amount to EUR 199,759.
17 Stocks 2007 2006
CHF CHF
Raw materials - 146,302 144,374
foods and beverages
Other consumables 81,446 70,600
227,748 214,974
All stocks are stated at cost which approximates their fair values. There are no
write-downs in value.
18 Trade and other 2007 2006
receivables
Amounts falling due CHF CHF
within one year:
Trade debtors 50,144 59,892
Other debtors, 100,616 64,963
prepayments and
accrued income
150,760 124,855
19 Capital and reserves 2007 2006
Share capital CHF CHF
Allotted, issued and 10,128,006 10,128,006
fully paid up
Number of shares of 4,822,860 4,822,860
CHF 2.10 each
The Company has one class of share which carries equal voting rights and rights to
distributions of dividends from available retained earnings.
Stock option plan
On 1st August 2005, the general meeting of shareholders of the Company approved a
stock option plan for the benefit of the directors and key employees. At 31 December
2007 there were in circulation 388,812 options at £1.85, 48,299 options at £1.15 and
21,411 options at £0.90.
2007 2006
Share premium CHF CHF
Premium on issue of 4,348,500 4,348,500
new shares
Less charges of (2,388,965) (2,388,965)
raising finance
Share premium 1,959,535 1,959,535
balance at end of
year
Legal reserve
The Company is obliged to make a transfer of at least 5% of its annual net profits to
a legal reserve. Retained losses are deducted in determining the amount of the annual
transfer. This transfer ceases when the legal reserve is equal to 10% of the
subscribed share capital, but recommences if it falls below this level. The legal
reserve is not available for distribution, except on dissolution.
A legal reserve is not required since the Company has accumulated losses.
20 Non-current liabilities 2007 2006
CHF CHF
Obligations under finance leases and hire 15,257 61,037
purchase contracts
Obligations under finance leases in respect of equipment and vehicles are
for periods of two to five years and are recorded as liabilities in the
balance sheet. The lease contracts bear interest at rates of between 5%
and 5.7% and are repayable in fixed monthly instalments of principle and
interest over the period of the lease. In the event that lease
obligations are not fulfilled, the lessor has a right to recover the
asset.
The leases to which these amounts relate expire 2007 2006
as follows:
CHF CHF
In one year or less ( classified as a current 45,780 52,771
liability)
Between one and five years ( classified as a 15,257 61,037
non-current liability)
In five years or more (classified as a -
non-current liability)
61,037 113,808
Aggregate minimum lease payments due under the 61,037 113,808
contracts inclusive of finance charges amount to:
The finance charges therein amount to 2,415 6,566
21 Trade and other payables 2007 2006
Amounts falling due within one year CHF CHF
Trade creditors 1,135,534 1,386,198
Other taxes and social security 135,533 326,864
Other creditors, accruals and deferred income 599,107 560,568
1,870,174 2,273,630
22 Provisions for other liabilities and charges 2007 2006
Charged in the current year CHF CHF
Claims for compensation and benefits 804,732 -
Provisions for legal charges 110,000 90,000
914,732 90,000
During the months of March and April 2008 new Management has discussed labour relations in the Company's sector of activity with Swiss
union representatives. The discussions included topics surrounding compliance with regulatory requirements relating to minimal compensation
and benefits due to employees. One of the purposes was to clarify the amounts that may have to be paid to employees in order to comply with
regulatory requirements relating to minimal compensation and benefits that came into effect during the course of 2005. The outcome of these
discussions is uncertain and the related retroactive financial effect, if any, cannot be determined yet with sufficient accuracy. However
the Directors consider it prudent to make a provision of CHF 726,863 in these accounts.
In March 2008 a claim corresponding to CHF 77,869 has been made by a former director for services rendered during the period of sale of
our Company's shares to the new Investor, Belvia s.r.l. The Directors challenge the validity of this claim, but as a matter of prudence, a
provision has been made in these accounts.
23 Capital and
contractual
commitments
Under a franchise agreement with Domino's Pizza International Inc. USA, the Company
has a commitment to pay US$10,000 on the opening of every new store from the ninth
store onwards. In addition the Company has to pay a royalty fee to Domino's Pizza
International Inc.based on its sales and is required to set aside a percentage of its
sales revenue for advertising and marketing.
Under contractual commitments, the Company is obligated to pay performance
remuneration to directors which are conditional on the Company achieving performance
targets.
24 Leasing commitments
Operating leases
The Company has commitments under several short-term and long-term operating leases in
respect of its offices, stores and related parking. The offices and stores leases are
for periods of 5 years, renewable, and with cancellation notice periods of six months
before the expiry of the contract. In the event of cancellation before the expiry of
the term of the lease, penalty cancellation charges are payable.
2007 2006
CHF CHF
Charge for 396,968 379,244
operating leases for
the year
The future minimum
payments under these
leases expire as
follows:
In one year or less 396,191 363,526
Between one and five 931,052 913,348
years
In five years or 334,850 -
more
1,662,093 1,276,874
25 Financial risk
management
The Company's turnover is dependent on a single product, being the production and sale
of pizzas. Company's licence for Domino's pizza is limited to Switzerland,
Liechtenstein and Luxembourg.
Sales are mainly carried out in cash or by credit card payments. Management has
implemented controls to monitor the cash collections; exposure to credit risk is
limited to the amount of trade receivables and receivables from card processing
companies. The receivables are stated net of provisions for doubtful debts estimated
by management based on collections and economic conditions. The Company is not
dependent on key customers and has no significant risk associated to any one customer.
The directors consider that the carrying values of trade and other receivables
approximate their fair value.
Liquid funds assets are placed with regulated banks in Switzerland and Luxembourg and
the balances represent their fair value. Short term bank overdrafts are obtained to
meet working capital needs.
26 Related parties
During the year ended 31 December 2007 the Company was controlled by members and
companies of the Moldawsky family and the Moldawsky group which has its registered
office in Israel. Other than remuneration paid to directors for their daily management
of the Company's affairs, there was no other transactions with related parties.
27 Reconciliation of net cash flows from operating activities
2007 2006
CHF CHF
Loss on ordinary activities before (2,003,557) (1,313,820)
taxation
Adjustments for :
Depreciation and amortisation 1,045,502 557,373
Deferred tax credit (403,618) (584,698)
Provisions for charges 824,732 90,000
Financial interest result (104,524) (104,224)
Operating cash flows before movements (641,465) (1,355,369)
in working capital
Decrease/(increase) in stocks (12,774) (58,987)
Decrease/(increase) in debtors (25,905) 132,421
Increase/(decrease) in creditors and (403,456) 659,600
provisions
Net cash inflow (outflow) from (1,083,600) (622,335)
operating activities
For further information:
Global Brands S.A.
Yair Hasson, Executive Chairman Tel: +41 43 255 2141
Cell: +41 79 686 9531
Zimmerman Adams International Ltd
Graeme Thom Tel: 020 7060 1760
Fiona Kinghorn 020 7060 1760
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UOUVRWRRVAAR
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