Signature Restaurants, the group that counts Belgo restaurants and the upmarket Ivy eaterie among its properties, has said it is still in takeover discussions, but painted a gloomy picture of its prospects.

The company has dramatically cut back its operations in the past year but is still suffering from falling sales.

Belgos shut

Bristol Dublin Ladbroke Grove, London

It said: "We do not anticipate a material recovery across the industry in central London during 2002/03."

But the group would not comment on speculation that a management buy-out is being led by chairman Luke Johnson, who owns 5% of the company.

Mussels go cold

Signature's portfolio includes the Strada pizza chain, and the Belgo and Bierodrome Belgian-themed venues.

The group also owns a cluster of so-called "signature" restaurants, which includes the fashionable Ivy, Le Caprice and J Sheekey.

However, the group has suffered a sharp fall in sales and profits in the last two years, which was then compounded by the slowdown in tourists since September 11.

The negative performance has led to suggestions that the management are seeking to take the group private and remove its shares from the London Stock Exchange.

Signature has said it received an approach for the company and that it is still "under offer".

Dwindling portions

While its fate hangs in the balance, the group is taking cost-cutting measures as its profits continue to fall.

In the year to 30 June, Signature closed three Belgo outlets - in Dublin, Bristol and London's Ladbroke Grove - three Bierodrome bars and its upmarket London restaurant The Collection.

Profits in the year fell from �4.3m to �3.1m, and only its Strada chain performed well - although the group admitted "Strada's contribution to the group's overall profitability remains relatively modest".

Despite the significant cuts, the group said "the London restaurant market remains highly competitive" and even its much-photographed Ivy restaurant only had flat profits.