Patisserie Holdings PLC, the leading UK branded café and casual dining group, has reported strong preliminary results for the 12 months ended 30 September 2015 with Luke Johnson, Executive Chairman, saying:
“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.”
Financial summary
| 12 months ended | 12 months ended | ||
| 30 September 2015 | 30 September 2014 | Change | |
| £m | £m | % | |
| Revenue | 91.9 | 76.6 | 20.0% |
| Adjusted EBITDA* | 18.8 | 15.3 | 22.9% |
| Adjusted pre-tax profit* | 14.6 | 11.3 | 29.2% |
| Statutory pre-tax profit | 14.6 | 10.4 | 40.4% |
| Basic earnings per share | 11.41p | 10.41p | 9.6% |
| Diluted earnings per share | 11.32p | 10.12p | 11.9% |
*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
The Chief Executive’s Review states:
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.
