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Global Brands S.A. - Final Results

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 Â# 1.85, Â#1.15 and Â#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 Â#1.85, 48,299 options at Â#1.15 and 21,411 options at Â#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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Price: 7.75

Market: TSX-V
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Great Bear Resources releases more compelling results from Dixie Project in...

Great Bear Resources (CVE:GBR) President and CEO Chris Taylor dropped into the Vancouver studio of Proactive Investors to talk about more interesting results from their Dixie Project in Red Lake, Ontario. These results deal with the Hinge Zone. Taylor telling Proactive about the great...

on 9/5/19