Patisserie Holdings Plc Regulatory News (CAKE)

Patisserie Holdings PLC ('the Group')

Preliminary results for the 12 months ended 30 September 2014

Patisserie Holdings PLC, the leading UK branded café and casual dining group, today reports its maiden preliminary results for the 12 months ended 30 September 2014

Financial summary

*excluding £0.9m of costs associated with admission to AIM and acquisition of Philpotts.

Financial highlights

· Continued strong growth in revenue (£76.6m), up 27.5%, and adjusted EBITDA (£15.3m), up 27.2%

· Significant growth in adjusted pre-tax profit (£11.3m), up 37.0%

· Strong balance sheet maintained with all long-term debt repaid during the year

· Operations remain strongly cash generative. Underlying operating cash inflows of £11.7m (pre-exceptional items), up 11.4%

· 100% increase in online sales to £2.6m (2013: £1.3m)

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

Operational highlights

· 19 new stores opened in the year (2013:19)

· Acquisition of Philpotts (Holdings) Limited in February 2014 which added 23 stores to the Group

· 148 stores at end of year (2013:108) made up of new openings and Philpott's acquisition

· Continued Group expansion - First motorway service station and retail park stores opened; and our first store in Wales

· 20 new stores targeted for 2015

Current Trading

Trading in the first six weeks of the year has been good and the business continues to perform in line with management's expectations. Since the year end we have already opened 3 new stores and the strong pipeline of new sites provides confidence that we can achieve the planned number of stores for the year, all funded from operating cash flows.

Luke Johnson, Executive Chairman, said

"I am pleased to report another excellent performance for Patisserie Holdings in what has been a pivotal year in the development of the Group. The management team has delivered the eighth consecutive year of organic growth, acquired the Philpotts business and in May successfully listed the Company on AIM. Each of our five differentiated brands continues to grow and, with the Group's strong cash generation funding our future organic growth, we are looking forward to another exciting year in 2015."

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

Peter Stewart

Joe Weaving

Financial Public Relations

Maitland +44 (0) 20 7379 5151

Brian Hudspith

James Devas

Chief Executive's Review

Results

I am pleased to report our maiden results as a public company for the 12 months ended 30 September 2014, continuing our track record of growth. The Group delivered an increase in revenue of £16.5m or 27.5% to £76.6m (2013: £60.1m). Adjusted EBITDA, adjusted for one-off costs of £0.6m relating to the admission to AIM and £0.3m for the acquisition of Philpotts, was £15.3m, an increase of £3.3m or 27.2% (2013: £12.0m). Adjusted pre-tax profit was £11.3m, an increase of £3.1m or 37% (2013: £8.2m). Statutory pre-tax profit, after the above-mentioned one-off costs, was £10.4m which was £2.2m or 26.8% higher than the previous year (£2013: £8.2m).

Adjusted basic earnings per share of 11.41 pence per share was 29.0% up on last year (2013: 8.85 pence per share) and adjusted diluted earnings per share was 11.10 pence per share which was 31.7% higher than last year (2013: 8.43 pence per share).

All of our brands performed well in the year, and we are encouraged by the excellent growth in online sales which increased by 100% compared to the prior year. Revenue from our main trading brand, Patisserie Valerie (98 sites), was £51.1m in 2014 compared to £42.4m in 2013, an increase of 20%. Revenue from our two other trading brands which traded for the full 12 months, Druckers (22 sites) and Baker & Spice (4 sites) grew from £16.1m in 2013 to £16.5m in 2014.

Flour Power City (1 site), our wholesale bakery acquired in May 2013 is now fully integrated into the Group. Sales improved from £2.4m in 2013 to £2.6m in 2014. The bakery also benefits from having additional production capacity and it is this operational gearing which has helped to control gross profit margins in the Group.

These results are particularly pleasing in a year in which we also completed the acquisition of Philpotts and the admission of the Group to AIM.

Acquisitions

Although our primary strategy remains one of organic growth, we acquired Philpotts (23 sites), a premium sandwich retailer, in February 2014 for a consideration of £6.3m (including £2.2m to settle debt obligations and fees of £0.3m). With our expertise, as we modify the offering and incorporate the Group's purchasing power, we expect further synergies and gross profit efficiencies as the entity is fully integrated into the Group.

With our balance sheet strength we are well positioned to take advantage of future acquisitions opportunistically provided they meet the Group's store payback period of 24 months

Estate Development

We opened 19 new stores in the year, just short of our target of 20 openings per year.

Leases on two stores expired in the year and these sites were closed. One of these was the only loss making store within the entire estate, inherited as part of an earlier acquisition. This brings the number of stores in our Group to a total of 148, all of which are profitable.

The 19 new store openings are a mixture of traditional high-street shops and shopping centre outlets, including our first store in Wales, expanding our geographical presence. We also opened our first motorway service station outlet in Beaconsfield. All of our new stores are delivering a positive contribution.

Of the stores opened in FY13, all 19 stores are trading well and the majority have already paid back the capital outlay well ahead of the 24 month target that we set. Encouragingly a number of stores opened in FY14 have also paid back their capital outlay already.

We will continue our roll out strategy in 2015 and beyond and will look to open a further 20 stores in the year ending 30 September 2015. Since the year end we have already opened 3 new stores and are confident that we can achieve the planned number of stores for the year, all to be funded from operating cash flows.

Cash flow and financing

The admission to AIM generated net cash proceeds of £33.9m for the Group which enabled us to repay all external long-term bank debt and shareholder loan notes.

Cash flow from operations remains strong with £9.3m of cash inflows before exceptional items. As our external bank debt was repaid, we accelerated the timing of our payment cycle, this has resulted in cash being temporarily lower (£2.4m) at the balance sheet date; we expect this to realign in 2015. Our underlying operating cash inflows are £11.7m (pre-exceptional costs) which compares to £10.5m of cash inflows in the prior year.

We invested £7.0m for the purchase and fit out of our new stores which was self-funded from operating cash flows and incurred £6.3m on the acquisition of Philpotts.

People

2014 has been a pivotal year in the life of Patisserie Holdings and our success is due to the commitment of our employees. The staff who work in our stores are the face of our Group and we place great importance on welcoming our customers into our stores. We take feedback from our customers seriously and this information is reported to the Executive team on a monthly basis.

As the business continues to grow and becomes more complex we have taken the opportunity to bring new talent and experience into our business. We have strengthened a number of key positions including our Board, senior Operations, Finance and Marketing. We are already seeing the benefits of this recruitment for example our online revenues have increased from £1.3m in 2013 to £2.6m in 2014.

We continue to reward our staff and in June we implemented a share options scheme for our employees.

I'd like to take this opportunity to thank our teams for their hard work and dedication.

Dividends

As previously announced, the Directors continue to anticipate a maiden dividend to be paid in respect of the financial year ending 30 September 2015.

Outlook

With five differentiated brands we are well placed across the fragmented UK coffee shop and casual dining markets, where we believe there is significant potential for growth. Our strategy to roll-out new stores is on track and delivering returns in line with our expectations. With each of our brands continuing to grow, profitable stores across the entire estate and encouraging current trading, we are looking forward to another exciting year in 2015.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2014

CONSOLIDATED BALANCE SHEET

AT 30 SEPTEMBER 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2014

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2014

 NOTES TO THE PRELIMINARY RESULTS

1. This announcement was approved by the Board of Directors on 25 November 2014. 

1.1. The financial information set out above does not constitute the Group's statutory financial statements for the years ended 30 September 2014 or 2013, but is derived from those accounts. Statutory financial statements for 2013 have been delivered to the Registrar of Companies and those for 2014 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 498(2) or 498(3) of the Companies Act 2006.

1.2. For the year ended 30 September 2014 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 2014. 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 2014. 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 strategic decision maker 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 to goodwill and reclassification for statutory reporting purposes and exceptional items. Revenue within overheads relates to income received centrally which is not allocated to individual operating segments.

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

7. Business Combinations

On 28 February 2014 the Group acquired 100 per cent of the outstanding ordinary share capital and obtained control of Philpotts (Holdings) Limited, a sandwich and salad retailer with 23 shops in the UK. As a result of the acquisition, the Group has extended its presence in the casual dining market and also expects to reduce costs through economies of scale.

The acquisition details as at 30 September 2014 are stated below. The reference to provisional values refers to the amounts included within the half yearly results as disclosed in the Admission Document on listing on AIM.

The goodwill arising of £3.6m from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Group and Philpotts. None of the goodwill recognised is expected to be deductible for income tax purposes. A brand value has been recognised to reflect the value of customer relationships and the trading name. This has been valued using a royalty free model across a ten year period. No other intangibles, such as customer contracts, were identified.

The revenue included in the consolidated statement of comprehensive income since 28 February 2014 contributed by Philpotts Limited was £6.3m. Philpotts also contributed profit of £0.5m over the same period. Had Phillpotts been consolidated from 1 October 2013, the consolidated statement of comprehensive income would have shown revenue of £80.6m and profit after tax of £9.1m.

The Financial Statements for the 12 months ended 30 September 2014 will be posted to shareholders and laid before the Company at the Annual General Meeting; this will be held on 30th January 2015 at 12.30pm 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.