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Patisserie Holdings PLC  -  CAKE   

Preliminary results 12 months ended 30 Sept 2017

Released 07:00 27-Nov-2017

RNS Number : 5125X
Patisserie Holdings PLC
27 November 2017
 

Patisserie Holdings PLC ('the Group')

 

Preliminary results for the 12 months ended 30 September 2017

 

Patisserie Holdings PLC, the leading UK branded café and casual dining group, today reports its preliminary results for the 12 months ended 30 September 2017

Financial summary


12 months  ended

12 months  ended



30 September 2017

30 September 2016

Change


£m

£m

%

Revenue

114.2

104.1

9.7%

Gross profit

89.3

81.3

9.8%

EBITDA

25.6

22.2

15.7%

Statutory pre-tax profit

20.2

17.2

17.1%

Basic earnings per share

16.36p

13.74p

19.1%

Diluted earnings per share

16.20p

13.60p

19.1%

Final dividend per share

2.40p

2.00p

20.0%

 

Financial highlights

·      Revenue up 9.7% to £114.2m (2016: £104.1m)

Online sales up 26% to £4.8m (2016: £3.8m)

·      Gross profit of £89.3m up by 9.8% (2016: £81.3m)

Gross margin of 78.2% (2016: 78.1%)

·      EBITDA of £25.6m up 15.7% (2016: £22.2m)

·      Excellent growth in pre-tax profit to £20.2m up 17.1% (2016: £17.2m)

·      Diluted earnings per share of 16.20 pence up 19.1% (2016: 13.60 pence per share)

·      Net cash at year end of £21.5m (2016: £13.3m) with operating cash inflows of £24.4m (2016: £22.0m)

·      Average store payback period of 23 months (ahead of our 24 month target)

·      Final dividend of 2.40 pence per share proposed up 20.0% (2016: 2.00 pence per share)

 

Operational highlights

·      Successfully opened 20 stores in the year including stores in 12 new geographical locations

Expansion outside of England continues with two stores opened in Republic of Ireland, a second store opened in Northern Ireland and two new stores in Scotland

First store opened under the Philpotts brand

All new stores profitable from first day of trading and funded from operating cash flows

·      Trading from 199 stores at end of year (2016:184)

·      20 new stores targeted for 2018 with four opened since the financial year end

·      Entered into a supply only agreement with Sainsbury's during the year, trading from 18 Sainsbury's counters by the year end

·      Costs tightly controlled with inflationary wage and ingredient cost pressures mitigated in the year

 

Luke Johnson, Executive Chairman, said

"We have delivered another year of excellent financial results, achieving our targets in a challenging environment. We opened 20 new stores many of which are performing ahead of expectations, and the performance of our new bakeries in the Republic of Ireland is encouraging. Our indulgent, affordable treats remain attractive to customers, and our flexible business model has enabled us to mitigate inflationary cost pressures. With a highly cash generative group, strong brands and a focused management team I remain confident of another year of growth and achievement."

Enquiries

Patisserie Holdings PLC

+44 (0)121 777 7000

Luke Johnson, Executive Chairman

Paul May, Chief Executive Officer

Chris Marsh, Finance Director

 

Nomad and Broker

Canaccord Genuity Limited

+44 (0)20 7523 8000

Bruce Garrow

Chris Connors

 

Financial Public Relations

Maitland

+44 (0) 20 7379 5151

James Devas

Jonathan Cook

 

Chief Executive's Review

Overview

I am pleased to report the results for the year ended 30 September 2017 which has been another strong year for the Group. The management team delivered record sales and profit, against the backdrop of a challenging economic and operating environment. We also achieved our target of opening 20 new stores.

In the year we have tested a number of new markets, including expansion into the Republic of Ireland, opening our first Philpotts branded store, trialling our Patisserie Valerie product within Sainsbury's and the development of a number of new product lines.

In the prior year we opened our first store in Belfast in Northern Ireland and the store was fitted with a bakery to support expansion in this area. Following a strong performance at this first store in Belfast, in the year we opened our second Northern Irish store and our first and second international stores in the Republic of Ireland. All of these stores have been well received by our new customers and are performing ahead of expectations. These openings give management confidence that the brand has international appeal and expansion potential.

In 2014 we acquired the Philpotts brand which is a premium sandwich and salad retailer. In the year under review we opened our first store under this brand in Manchester's financial and professional services hub at Spinningfields. Since opening, this store has consistently ranked in the top three performers under the Philpotts offering. The success of this store provides potential for a roll-out of the Philpotts brand.

We continue to engage with our customers via social medial platforms. We have run a number of online competitions in the year, one of which resulted in the customer designed Madame Valerie gateau. This type of engagement has boosted our Facebook followers by over 100% to 140,000 followers (2016: 70,000 followers). Cake Club membership continues to grow and is up 11.9% to 404,000 members (2016: 361,000 members) with pleasing growth on other platforms such as Twitter and Instagram. All of these online channels help increase our brand profile, and contributed to an increase in online sales of 26% to £4.8m (2016: £3.8m).

We have serviced the Group over the last few years from our main bakery in Birmingham and from seven satellite bakeries across the UK. Although we have excess capacity in our bakeries, as our geographical footprint expands, we have started to review how we best serve our estate from a production and logistical stand point. We are currently reviewing options for an additional production facility in the Manchester area with capacity to serve approximately 70 stores as well as instore baking of morning goods from within all of our stores. Both of these initiatives will provide additional capacity to the Group as well as releasing savings and efficiency and improving product quality.

We finished the year encouragingly and this momentum has carried into the first eight weeks of 2018. We have just launched our new festive range, which includes two new limited edition slices, and are looking forward to another successful year ahead.

Financials

Revenue for the year is £114.2m, an increase of £10.1m or 9.7% (2016: £104.1m). EBITDA is £25.6m, an increase of £3.4m or 15.7% (2016: £22.2m) and profit before tax is £20.2m, an increase of £3.0m or 17.1% (2016: £17.2m).

Basic earnings per share are 16.36 pence per share (2016: 13.74 pence per share) and diluted earnings per share are 16.20 pence per share (2016: 13.60 pence per share), an increase of 19.1%.

Revenues from our largest brand, Patisserie Valerie, which trades from 152 stores, are £84.3m, up £10.4m or 14.1% (2016: £73.9m from 135 stores) and revenues from our other brands are £29.9m, down £0.4m or 1.3% due to two store closures (2016 £30.2m).

In the first half of the year we experienced rising costs with prices returning to normalised levels in the second half of the year. We worked hard with our suppliers to manage costs and also realised production efficiencies from investment in our bakeries in the prior year which resulted in a stable gross profit margin of 78.2% (2016: 78.1%). Although the inflationary environment appears to be easing, we remain alert to any pricing pressures.

Minimum wage increases from 1 October 2016 and National Living wage increases from April 2017 had an impact during the year of £0.3m.

Other costs have remained relatively stable in the year with modest rent increases offset by savings made in operating costs. 

Estate Development

The Board's strategy for organic growth targets 20 new store openings per annum. During the year we successfully achieved this target, opening 20 stores across counter and full menu offerings. The openings were predominantly in high-street and retail parks locations, (11 stores) however we also developed our partnership with Debenhams. We opened one store at St Pancras train station and one Philpotts store.  During the year, leases on five stores expired and as these stores were no longer in prime locations they were closed, taking the total number of trading stores to 199 at the end of the year (2016: 184).

As discussed above, new markets in which we have opened stores in the year include our second store in Northern Ireland, our first and second international stores in the Republic of Ireland and our first Philpotts branded store. All of these stores are performing ahead of expectations and give management confidence in these territories.

Three of the openings this year were in retail outlets: McArthur Glenn Ashford, Rushden Lakes Northampton and The Lexicon Bracknell, bringing the total number of stores in retail outlets to seven. Performance at all of our stores in retail outlets remain consistently strong.

We continue to target new towns and cities for store openings and in the year opened in twelve new geographical locations. Many of these stores are performing ahead of expectations and reinforces the demand for the Patisserie Valerie brand.  

Due to the highly cash generative nature of the business, the rollout programme is funded entirely from operating cash flows. All of our new stores were profitable from the first week of trading and we expect all of these stores to achieve the payback target of 24 months.

Since the year end we have opened four new stores with two store due to open in the next two weeks,  exchanged contracts for two stores and are in advanced negotiations at a further five locations. The strong performance of our new stores, especially at new geographical locations, continues to provide confidence in our ability to grow our estate across the UK and Ireland.

Cash flow and financing

The group generated operating cash flow of £24.4m, up £2.4m or 10.9% (2016: £22.0m). Income tax payments of £4.0m were made and £9.4m was used for investing activities, leaving free cash flows of £11.0m (2016: £9.9m).

 

In the year £5.1m was invested in new stores, £1.5m of capital expenditure on refreshing the existing estate and £2.1m on central infrastructure. We continue to measure the ROI of our stores against a 24 month payback period and are pleased that the substantial majority of stores perform within this target.

 

From free cash flows, dividend payments of £3.2m were made to shareholders. We also generated £0.4m, of proceeds from the exercise of employee share options. Net cash at the end of the year was £21.5m (2016: £13.3m). The group remains solely funded from operating cash flows and is well positioned to make strategic acquisitions.

 

Dividends

In the year, we paid £2.0m in relation to the final dividend for FY2016 of 2.0 pence per share and an interim dividend costing £1.2m for FY2017 of 1.20 pence per share. The group is cash generative and the Board is committed to a progressive dividend policy for its shareholders. The Board is recommending a final dividend for FY2017 of 2.40 pence per share which represents a 20% increase over the final dividend paid in relation to FY2016. Subject to shareholder approval at the Annual General Meeting, to be held on 30th January 2018, the final dividend will be paid on 9th February 2018 to shareholders on the register at 12th January 2018.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2017

 





12 months ended

 30 September

12 months ended

 30 September






2017

2016






£'000

£'000






Total

Total


Notes






Continuing operations














Revenue





114,197

104,141

Cost of sales





(24,931)

(22,832)








Gross profit





89,266

81,309

Administrative expenses





(69,121)

(64,099)








Operating profit





20,145

17,210








Finance income





44

-

Finance expense





(36)

(6)








Profit before income tax





20,153

17,204

Income tax expense





(3,789)

(3,469)








Profit after tax and total comprehensive income for the year attributable to equity holders





 

16,364

 

13,735








Earnings per share







Basic earnings per share (pence)

2




16.36

13.74

Diluted earnings per share (pence)





16.20

13.60








 

CONSOLIDATED BALANCE SHEET

AT 30 SEPTEMBER 2017




30 September

30 September




2017

2016




£'000

£'000


Notes









ASSETS





Non-current assets





Intangible assets



17,747

17,797

Property, plant and equipment

6


39,674

36,498









57,421

54,295

Current assets





Trade and other receivables



12,327

11,004

Corporation tax



1,668

1,896

Inventories



5,980

4,862

Cash and cash equivalents



21,525

13,273









41,500

31,035






Total assets



98,921

85,330






EQUITY AND LIABILITIES





Equity





Capital and reserves attributable to the equity holders





Ordinary share capital



1,003

1,000

Share premium



34,084

33,661

Other reserves



708

391

Retained earnings



56,537

43,143






Total equity



92,332

78,195






Non-current liabilities





Deferred tax



1,422

2,054









1,422

2,054

Current liabilities





Trade and other payables



5,167

5,081









5,167

5,081






Total liabilities



6,589

7,135






Total equity and liabilities



98,921

85,330











 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2017

 

Share

 capital

Share

 premium

Merger

reserve

Capital redemption reserve

Share based payment reserve

Retained earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000









As at 1 October 2015

1,000

33,661

(312)

46

324

31,979

66,698









Result and total comprehensive income for the year

 

-

 

-

 

-

 

-

 

-

 

13,735

 

13,735










1,000

33,661

(312)

46

324

45,714

80,433

Transactions with owners








Dividends to equity holders of the company






(2,670)

(2,670)

Deferred tax credit relating to share option scheme

-

-

-

-

-

99

99

Increase in share based payments reserve

-

-

-

-

333

-

333

















As at 30 September 2016

1,000

33,661

(312)

46

657

43,143

78,195









Result and total comprehensive income for the year

 

-

 

-

 

-

 

-

 

-

 

16,364

 

16,364










1,000

33,661

(312)

46

657

59,507

94,559

Transactions with owners








Issue of ordinary shares under employee share option scheme

 

3

 

423

 

-

 

-

 

-

 

-

 

426

Dividends to equity holders of the company

 

-

 

-

 

-

 

-

 

-

 

(3,200)

 

(3,200)

Deferred tax credit relating to share option scheme

 

-

 

-

 

-

 

-

 

-

 

230

 

230

Increase in share based payments reserve

-

-

-

-

317

-

317

















As at 30 September 2017

1,003

34,084

(312)

46

974

56,537

92,332

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2017

 


Year to

 30 September

Year to

 30 September



2017

2016



£'000

£'000


Notes



Cash flows from operating activities




Profit before income tax


20,153

17,204





Adjusted by:




Depreciation


5,441

4,901

Amortisation


50

50

Net finance (income) / expense in the consolidated statement of comprehensive income


(8)

6

Share based payment charge


317

333





Changes in working capital:




Inventory


(1,118)

(426)

Trade and other receivables


(559)

(1,109)

Trade and other payables


86

999





Cash generated from operations


24,362

21,958

Net interest received / (paid)


8

(6)

Income tax paid


(3,962)

(3,378)





Net cash generated from operating activities


20,408

18,574





Cash flows from investing activities




Purchase of property, plant and equipment


(8,722)

(8,726)

Cash advances


(764)

-

Proceeds from disposal of property, plant and equipment


105

-





Net cash used in investing activities


(9,381)

(8,726)





Cash flows from financing activities




Net proceeds from issue of shares


425

-

Dividends paid to equity holders of the parent


(3,200)

(2,670)





Net cash used in financing activities


(2,775)

(2,670)





Net increase in cash and cash equivalents


8,252

7,178

 

Cash and cash equivalents at the beginning of the year


 

13,273

 

6,095





 

Cash and cash equivalents at the end of the year

 

 

 

21,525

 

13,273









 

NOTES TO THE PRELIMINARY RESULTS

1.       This preliminary results announcement was approved by the Board of Directors on 24th  November 2017. 

 

1.1.    The financial information set out above does not constitute the Group's statutory financial statements for the years ended 30 September 2017 or 2016, but is derived from those accounts. Statutory financial statements for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered in due course. The Independent Auditors' Report on the Annual Report and Financial Statements for both periods was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

 

1.2.    For the year ended 30 September 2017 the consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), and the Companies Act 2006 applicable to companies reporting under IFRS.

 

1.3.    This financial information has been prepared in accordance with the accounting policies stated in the Group's financial statements for the year ended 30 September 2017. The financial statements have been prepared on the historical cost basis. There are a number of new accounting standards, amendments to existing standards and interpretations which are mandatory for the year ended 30 September 2017. No changes arising from new or revised accounting standards have had a material impact on the consolidated financial statements of the Group.

 

2.       Earnings per Share

 
















Earnings

£'000

2017 Weighted average number of shares

Earnings per share

(pence)

Earnings

£'000

2016 Weighted average number of shares

Earnings per share

(pence)

Basic earnings per share

16,364

100,054,292

16.36

13,735

100,000,000

13.74

Effect of dilutive share options

-

942,068

-

-

998,163

-

Diluted earnings per share

16,364

100,996,360

16.20

13,735

100,998,163

13.60








 

3.       Segmental Analysis

 

Management has determined the operating segments based on the reports reviewed by the Chief Operating Decision Maker ("CODM") comprising the Board of Directors. The segmental information is split on the basis of those same profit centres, however, management report only the contents of the income statement and therefore no balance sheet information is provide on a segmental basis in the following tables:

 

September 2017

Patisserie Valerie

Druckers

Baker & Spice

Flour Power

Philpotts

Overhead

As reported to the CODM

Reconciling items *

Total

IFRS


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000











Revenue

84,339

13,059

4,738

3,634

10,183

-

115,953

(1,756)

114,197

Cost of sales

(15,610)

(2,813)

(1,269)

(1,168)

(3,152)

(2,775)

(26,787)

1,856

(24,931)











Gross profit

68,729

10,246

3,469

2,466

7,031

(2,775)

89166

100

89,266











Administrative expenses

(48,118)

(8,889)

(2,266)

(1,598)

(5,117)

2,458

(63,530)

(100)

(63,630)

Depreciation and amortisation

 

(4,344)

 

(155)

 

(69)

 

(303)

 

(469)

 

(151)

 

(5,491)

 

-

 

(5,491)

Net finance income

-

-

-



8

8

-

8











Profit before income tax

16,267

1,202

1,134

565

1,445

(460)

20,153

-

20,153

Income tax expense

-

-

-

-

-

(3,789)

(3,789)

-

(3,789)











Profit for the financial year

 

16,267

 

1,202

 

1,134

 

565

 

1,445

 

(4,249)

 

16,364

 

-

 

16,364











Non-current assets







57,421

-

57,421

Current assets







41,500

-

41,500











Non-current liabilities







(1,422)

-

(1,422)

Current liabilities







(5,167)

-

(5,167)











Net assets







92,332

-

92,332





















Capital expenditure







8,722

-

8,722











 

*The reconciling items relate to year-end consolidation adjustments and reclassification for statutory reporting purposes.

Revenue within each trading segment is derived from income from restaurant, takeaway, online and wholesale sales. Revenue within overheads relates to income received centrally which is not allocated to individual operating segments.

Segmental revenues are reported gross of sales to other reportable segments. Flour Power revenues include £1.8m (2016: £1.7m) made to other operating segments. Other operating segments report sales to external customers only.

All of the Group's revenue from continuing operations has been generated from UK operations except for £361k which is generated in Republic of Ireland. All non-current assets are held in the UK except for £369k held in Republic of Ireland.

The Group does not have any customers whom account for more than 10% of external revenue.

 

September 2016

Patisserie Valerie

Druckers

Baker & Spice

Flour Power

Philpotts

Overhead

As reported to the CODM

Reconciling items *

Total

IFRS


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000











Revenue

73,905

13,310

4,701

3,684

10,244

-

105,844

(1,703)

104,141

Cost of sales

(13,550)

(2,983)

(1,332)

(1,336)

(3,511)

(2,053)

(24765,)

1,933

(22,832)











Gross profit

60,355

10,327

3,369

2,348

6,733

(2,053)

81,079

230

81,309











Administrative expenses

(42,754)

(8,976)

(2,212)

(1,592)

(5,105)

1,721

(58,918)

(230)

(59,148)

Depreciation and amortisation

(3,786)

(135)

(46)

(221)

(420)

(343)

(4,951)

-

(4,951)

Finance expense

(2)

(3)

-

(1)

-

-

(6)

-

(6)











Profit before income tax

13,813

1,213

1,111

534

1,208

(675)

17,204

-

17,204

Income tax expense

-

-

-

-

-

(3,469)

(3,469)

-

(3,469)











Profit for the financial year

13,813

1,213

1,111

534

1,208

(4,144)

13,735

-

13,735











Non-current assets







54,295

-

54,295

Current assets







31,035

-

31,035











Non-current liabilities







(2,054)

-

(2,054)

Current liabilities







(5,081)

-

(5,081)











Net assets







78,195

-

78,195





















Capital expenditure







8,726

-

8,726











 

4.       Earnings before interest, tax, depreciation and amortisation (EBITDA)

 



12 months ended 30 September 2017

12 months ended 30 September 2016



£'000

£'000

Operating profit


20,145

17,210

Depreciation and amortisation


5,491

4,951





EBITDA


25,636

22,161





 

5.       Taxation

 



Sept 2017

Sept 2016



£'000

£'000

Current tax:




UK corporation tax at rates: 2017 - 19.0%, 2016-20.0%


4,115

3,236

Prior period adjustment


77

14







4,192

3,250

Deferred tax:




Origination and reversal of temporary differences


(403)

219





Tax for the year


3,789

3,469





Factors affecting current tax charge:

The tax assessed on the profit for the period is different to the standard rate of corporation tax in the UK. The differences are explained below:



Sept 2017

Sept 2016



£'000

£'000





Profit before income tax


20,153

17,204





Profit for the year multiplied by the standard rate of corporation tax at 19.0% (2016: 20.0%)


 

3,930

 

3,441





Expenses not deductible for tax purposes


-

-

Adjustment in respect of prior periods


77

14

Other


(218)

14







3,789

3,469





 

6.       Property, Plant and Equipment

 


Freehold land and buildings

Leasehold property improvements

Plant, equipment, fixtures and fittings

Motor vehicles

Total


£'000

£'000

£'000

£'000

£'000

Cost






At 1 October 2015

1,798

14,676

44,053

56

60,583

Additions

-

363

8,363

-

8,726

Disposals

-

(68)

(526)

(29)

(623)







At 30 September 2016

1,798

14,971

51,890

27

68,686

Additions

-

1,267

7,455

-

8,722

Disposals

-

(290)

(292)

(27)

(609)







At 30 September 2017

1,798

15,948

59,053

-

76,799













Depreciation






At 1 October 2015

255

5,490

22,122

37

27,904

Charge for the year

26

937

3,930

8

4,901

Disposals

-

(68)

(526)

(23)

(617)







At 30 September 2016

281

6,359

25,526

22

32,188

Charge for the year

26

937

4,473

5

5,441

Disposals

-

(185)

(292)

(27)

(504)







At 30 September 2017

307

7,111

29,707

-

37,125







Net book values






At 30 September 2017

1,491

8,837

29,346

-

39,674

At 30 September 2016

1,517

8,612

26,364

5

36,498







 

The Financial Statements for the 12 months ended 30 September 2017 will be posted to shareholders and laid before the Company at the Annual General Meeting; this will be held on 30th January 2018 at 10.30 a.m. at Patisserie Valerie Spitalfields, 37 Brushfield Street London E1 6AA.

Copies of The Financial Statements will be available from the Company Secretary at Patisserie Holdings PLC, 146-156 Sarehole Road, Birmingham, B28 8DT or from the Company's website https://www.patisserie-valerie.co.uk.  


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Preliminary results 12 months ended 30 Sept 2017 - RNS