Patisserie Holdings Plc Regulatory News (CAKE)

Patisserie Holdings PLC ('the Group')

Preliminary results for the 12 months ended 30 September 2015

Patisserie Holdings PLC, the leading UK branded café and casual dining group, today reports its preliminary results for the 12 months ended 30 September 2015

Financial summary

*Excluding £0.9m of costs associated with admission to AIM and acquisition of Philpotts in 2014.

Financial highlights

· Continued strong growth in revenue up 20.0% to £91.9m (2014: £76.6m)

· Gross profit of £71.0m up by 19.7% (2014: £59.3)

· Adjusted EBITDA of £18.8m up 22.9% (2014: £15.3m)

· Significant growth in adjusted pre-tax profit to £14.6m up 29.2% (2014: £11.3m)

· Underlying operating cash inflows of £18.3m, up 118% with net cash of £6.1m at the year end

· Online sales up 20% to £3.1m (2014: £2.6m)

· Average store payback period of 23 months ahead, of 24 month target

· Maiden final dividend of 1.67 pence per share proposed

Operational highlights

· Successful launch of "create-a-cake" and afternoon tea which generated revenue of £0.8m and £1.2m respectively

· 26 new stores opened in the last 14 months since the last reporting date all funded from operating cash flows

· 166 stores at end of year (2014:148)

· Continued Group expansion - First designer outlet store, second motorway service station and further rollout across highstreets and shopping centres

· Philpotts now fully integrated into the Group and now benefitting from the Group's purchasing power

· 20 new stores targeted for financial year 2016. Including a first store in Belfast and the rollout of the Baker and Spice brand

Luke Johnson, Executive Chairman, said

"We are pleased to announce another record year for the Group where we have delivered excellent financial results. We strengthened our team following our IPO on AIM and have seen the benefits this year with new ideas and products enhancing our brands' reach. We are well positioned for future organic growth and acquisitions and I am particularly pleased to be able to announce our maiden dividend. Our pipeline for new stores is strong and I am confident of another successful year ahead."

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

Joe Weaving

Financial Public Relations

Maitland +44 (0) 20 7379 5151

James Devas

Chief Executive's Review

Results

I am delighted to report the results for the 12 months ended 30 September 2015 in which the Group has continued to deliver record levels of revenue and profits.

Revenue for the year is £91.9m, an increase of £15.3m or 20.0% (2014: £76.6m) of which £3.6m is due to the full year effect of the acquisition of Philpotts in 2014.

EBITDA is £18.8m, an increase of £3.5m or 22.9% (2014: £15.3m) and pre-tax profit is £14.6m, an increase of £3.3m or 29.2%.

Basic earnings per share were 11.41 pence per share which is an increase of 9.6% over last year (2014: 10.41 pence per share) and diluted earnings per share were 11.32 pence per share an increase of 11.9% over last year (2014: 10.12 pence per share). The growth in EPS is lower than the profit before tax rate of growth due to the weighted average number of shares being lower in 2014 due to the listing on AIM only part way during that year and due to the 2014 tax charge benefitting from the exercise of share options.

Brand Analysis

Revenue from our core brand Patisserie Valerie (116 stores) is £62.9m, an increase of £11.8m or 23% (2014: £51.1m). As well as focusing on our store roll-out programme, we have worked hard on the menu development side and have launched a number of new product lines during the year. Of our new products, the most successful single offering has been our new afternoon tea, which has contributed £1.2m in sales in the 6 months since its introduction.

Revenue from online sales increased by £0.5m or 20% to £3.1m (2014: £2.6m). Our online presence continues to grow with our Cake Club now at 306,000 members - a growth of 72% over the past year. Our Facebook followers grew by 136% to 46,800 followers. We re-launched out website in January 2015 which features 360 degree virtual tours of our cafes and a "create-a-cake" feature which allows our customers to design bespoke gateaux. "Create-a-cake" is now our bestselling online product and generated £0.8m of sales since the website re-launch.

Our other trading brands continued to perform in line with our expectations. Revenue from Druckers (22 stores), which is predominantly Midlands based and mainly offers a counter service, was up £0.2m to £12.4m (2014: £12.2m).

Revenue from Baker and Spice (4 stores) is up £0.2m to £4.4m in the year (2014: £4.2m). Baker and Spice was acquired by the Group in 2009 and is our premium brand, located in prime locations in central London. This brand generates the largest revenue per store in the Group and in 2016 we are looking to open our first new Baker and Spice store since its acquisition.

Flour Power City is our wholesale artisan bakery which supplies restaurants and markets in and around London. The bakery was acquired in May 2013 and as well as operating a wholesale business the bakery also supplies the group.

In February 2014 we acquired Philpotts, a 23 store premium sandwich retailer, for a consideration of £6.3m. Philpotts is now fully integrated into the Group and is operating with a streamlined back office function and is benefiting from the Group's purchasing power. We have also strengthened the operations team, modified the product range and introduced the café concept to some of the larger stores which has led to improved margins. In the 19 months since acquisition, Philpotts has contributed £1.8m of profit before tax to the Group and is ahead of our payback expectations at the time of acquisition.

Estate Development

Our store roll-out programme targets 20 new openings per annum and in the last 14 months we have opened 26 new stores all funded from operating cash flows. Eight new stores have opened in the seven weeks post the year end with a number of these that were on track to open in FY2015, opening a few weeks later than expected due to developer delays in large new developments. The 20 FY2015 stores are located across a mixture of high-streets and shopping centres and operate from a range of different formats, from brasserie (2), full service (13) to counter service (5). Highlights from our store rollout programme during the year include:

- Two further stores opened in Glasgow bringing the total number of stores in Scotland to 9.

- Following the success of our Beaconsfield motorway service station store (opened in FY2014) we opened a second motorway service station store at Baldock.

- We opened our first store within a designer outlet retail park in Swindon and opened our second retail park store in Romford.

- During the year we entered into a partnership agreement with Debenhams and opened 3 concession stores within Debenhams. We now operate concessions stores within Next, Fenwicks, Selfridges and Debenhams.

- The Resorts World store is one of our flagship stores and offers a full brasserie menu located close to the NEC which attracts an estimated 3 million visitors a year.

All of our new stores are trading well and several stores are forecast to repay their initial capital well ahead of the 24 month hurdle rate we set for our investment. These new locations noted above and their strong trading performance gives us optimism for further expansion.

We continue to work hard on our pipeline which is well developed to achieve the 20 store openings for FY2016. Since the year end we have opened 6 additional stores, exchanged contracts at 4 sites and are in advanced negotiations on a further 8 sites. As well as some exciting new locations for our Patisserie Valerie brand, including our first store in Belfast, we are also targeting expansion of our Baker & Spice brand in FY2016.

Cash flow and financing

The balance sheet remains strong with total net assets of £66.7m. The Group delivered operating cash flows of £18.3m in the year, an increase of £9.9m (2014: £8.4m). This reflects improved growing profitability and tighter control of working capital.

We invested £8.0m in capital expenditure of which £5.5m was invested in new stores and £2.5m was re-invested in refreshing our existing estate, production facilities and upgrading our logistics fleet.

The Group is now funded entirely by operating cash flows. We had a net cash position at the year-end of £6.1m (2014: overdraft £1.4m).

Our primary strategy remains that of organic growth. However we continue to review acquisition opportunities that will add value and are synergistic with our current operations.

Dividends

The Board is committed to a progressive dividend policy for shareholders and I am pleased to confirm that the Board is recommending a maiden final dividend of 1.67p per share, the Group's maiden dividend. Subject to shareholder approval at the Annual General Meeting to be held on 27th January 2016, the final dividend will be paid on 12th February 2016 to the shareholders on the register on 14th January 2016.

Current Trading and Outlook

We delivered our ninth consecutive year of growth in 2015 and this upward trend has continued into 2016 as trading to date remains positive. We have already opened eight new stores in the seven weeks since the financial year end. We have a well advanced pipeline and a healthy balance sheet which puts your company in a strong position to deliver another year of solid growth in 2016.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2015

CONSOLIDATED BALANCE SHEET

AT 30 SEPTEMBER 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2015

NOTES TO THE PRELIMINARY RESULTS

1. This preliminary results announcement was approved by the Board of Directors on 26th November 2015. 

1.1. The financial information set out above does not constitute the Group's statutory financial statements for the years ended 30 September 2015 or 2014, but is derived from those accounts. Statutory financial statements for 2014 have been delivered to the Registrar of Companies and those for 2015 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 2015 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 2015. 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 2015. 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

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:

*The reconciling items relate to year-end adjustments and reclassification for statutory reporting purposes and for the year ended 30 September 2014, exceptional items.

Revenue within each trading segment is derived from income from restaurant, takeaway, online and wholesale sales and 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 £1.1m (2014: £0.6m) made to other operating segments. Other operating segments report sales to external customers only.

Segmental operating profit excludes costs relating to central services provided by our Operations, IT, Marketing, HR and Finance Team and our Board of Directors

All of the Group's revenue from continuing operations has been generated from UK operations.

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

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

5. Taxation

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:

6. Property, Plant and Equipment

The Financial Statements for the 12 months ended 30 September 2015 will be posted to shareholders and laid before the Company at the Annual General Meeting; this will be held on 27th January 2016 at 12.00pm 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.