Patisserie Holdings Limited, which operates Patisserie Valerie and other UK branded café and casual dining outlets, has announced that it intends to proceed with an initial public offering and to apply for the admission to trading on AIM of the issued and to be issued ordinary shares in the capital of a newly established holding company of the Group.
Research has identified over 250 further potential sites in the UK with similar characteristics to those currently trading.
The Company is seeking to raise approximately £33 million (before expenses) through the Placing, the net proceeds of which will be used, amongst other things, to repay all of the Group’s existing outstanding senior debt of approximately £21.9 million and shareholder loans of approximately £10.8 million. In addition, the Selling Shareholders are expected to offer existing Ordinary Shares for sale pursuant to the Placing in an amount of up to £55 million.
Key highlights
- Experienced management team with proven sector track record
- Favourably positioned across both the coffee shop and branded casual dining markets, together forecast to be worth circa £6 billion and forecast to grow at over 8 per cent per annum
- All day trading format and affordable proposition with average café spend per head of £8.84 (excluding Philpotts)
- Broad customer appeal, supported by portfolio of five differentiated brands
- Today operates from 138 stores and the Flour Power City Bakery; proven across a wide range of different formats and geographical regions
- Vertically integrated business model, with almost all products made in-house
- 99 per cent. of stores open for more than 12 months profitable on a store contribution basis and average payback on new store openings less than 24 months
- Over 250 potential further new sites identified in the UK by independent research
- Reported EBITDA for 52 weeks ended 30 September 2013 of £12.0 million (up 25.1 per cent. over prior year)
- Rollout programme expected to be financed from internally generated cash flow
- Maiden dividend expected to be paid in respect of the financial year ending 30 September 2015
Summary
The Group is a leading UK branded café and casual dining group offering cakes, pastries, snacks, meals and hot and cold drinks from 138 stores and the Flour Power City Bakery in the UK. It operates under five differentiated brands across England and Scotland:
- Patisserie Valerie;
- Druckers – Vienna Patisserie;
- Philpotts;
- Baker & Spice; and
- Flour Power City Bakery.
The Group is favourably positioned across both the UK coffee shop and casual dining markets, which together are forecast to be worth in excess of £6 billion per annum and are forecast to grow at 8 per cent. per annum. The Group’s product mix and average café spend per head (£8.84) appeal to a wide range of dining occasions and deliver strong trading throughout the day, week, month and year.
The Group’s executive management team, led by Luke Johnson, Paul May and Chris Marsh, has overseen a period of growth from eight stores in 2006 to over 130, delivering seven years of uninterrupted increases in revenue and EBITDA. The Group has a proven track record of successfully opening an average of 15 new stores per annum over the three financial years ended 30 September 2013, delivering an average 23 month payback period, and of acquiring and integrating new brands, with Philpotts being the most recent.
99 per cent. of stores open for more than 12 months were profitable on a store contribution basis in the year ended 30 September 2013.
The Group’s strategy is focused on continuing to deliver growth through enhancing the existing store estate and opening new stores, funded by internally generated cash flow. Independent research conducted by Javelin has identified over 250 further potential sites in the UK with similar characteristics to those currently trading. The Directors consider the existing estate and openings opportunities currently available to be significant and, consequently, acquisitions of further brands are only likely to be considered opportunistically.
Luke Johnson, Executive Chairman of Patisserie Holdings Limited said:
“Patisserie Holdings has a leading position in an attractive market, built around five differentiated brands. The management team has an excellent track record in the sector and has grown the business from eight stores in 2006 to more than 130 stores today, delivering seven years of uninterrupted increases in revenue and EBITDA.
“I am pleased to welcome Lee Ginsberg who is joining the Board alongside Paul May, Chris Marsh and James Horler. The rapid progress made by the Group over recent years and the opportunities that lie ahead make this an exciting time for us to bring the Group to AIM.”