That's the view of Taste Holdings.

Taste Holdings (JSE:TAS) swallowed some jewellery and interim results published on Wednesday revealed a bad case of indigestion.

But CEO Carlo Gonzaga has Rennies on hand - and no regrets about moving from food into jewellery, which is now the biggest arm of the group.

The top lines of the income statement raise hopes with revenue up 170% to R85.8m, Ebitda up 54% to R11.7m and operating profit up 35% to R9m.

A group that has shunned debt in the past was set back heavily by interest costs of R3.5m (R600 000). As a result, headline earnings were down, as warned in the trading statement, by 43%. Until now Taste has been so set on growing (without debt) that it has not paid dividends.

Gonzaga says the no-dividend policy is not about to change, till debt on the Natal Wholesale Jewellers (NWJ) purchase is reduced and trading normalises.

New acquisition NWJ traditionally makes 70% of its money in the second half. Gonzaga says a lot of time, money and effort has gone into revamping NWJ, which should soar as soon as consumer sentiment lifts.

The new acquisition was down only 3.6% in the first half. Meantime it accounted for more than half of profits and sales.  I mean it appears to contribute R66m out of revenue of R85m and R7m out of operating profit of R11.7m.

Unfortunately yet another indecipherable Sens statement with columns of numbers out of synch and not adding up, makes it hard to be sure. (I am told Sens is working on its ghastly presentation of company results).

The other major chains are Scooters, the home delivery pizza chain, and Maxi's the chain of middle-market diners, many of which are to be found attached to large garages on the busiest national roads.

Moneyweb readers were a bit rude under Tuesday's story contrasting the differing fortunes of Taste and its rival Famous Brands.

"We have 2m customers with contrasting views. You will always have your detractors. Still, Scooters and Maxi's are holding up pretty well."

Gonzaga says while competitors have pulled in their horns cutting marketing, his chains have not battened down the hatches and should do well as conditions improve. That said, the whole group has been more careful about where to site its stores.

New stores are the lifeblood of franchised retail chains. In the past six months banks have been reluctant to fund prospective franchise holders. This slowed growth in the period but hopes are high that banks will be less cautious and the chains will all resume a better growth path.

Write to David Carte: davidcarte@moneyweb.co.za

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rubbish squared Ok so here are a few questions: 1/. will food be sold in the same retail outlets as jewellery once was? No. So what about rental cancellation costs? 2/. interest of 3.5 Million is 4% of turnover (which is up by a staggering 170%). . .more This is unsustainable.Any half-asleep journalist with claims to knowledge as to how to operate a calculator should have noticed this. or am i being harsh on the impoverished 4th estate? 3/. EBITDA and operating profit as staed are merely figments of an overly-stimulated imagination and bear no relation whatsoever to auditable facts. 3/. Do I give a phuque? No . .less by Plutarch on October 14 2009, 22:52 Find this comment inappropriate? Report it

@Plutarch Your first question makes zero sense. They're not going to start selling jewelry in thier fast food chains or fast food in thier jewelry stores, so why would they need to cancel any rental agreements? You make it sound like they're going . .more to stop selling jewelry which is not the case. . .less by Monkey on October 15 2009, 09:48 Find this comment inappropriate? Report it

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