REG - Prezzo PLC - Half Yearly Report

Wed Sep 5, 2012 2:00am EDT

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RNS Number : 5012L
Prezzo PLC
05 September 2012
 

Prezzo Plc

 

Interim Results (unaudited) for the 26 weeks ended 1 July 2012

 

Highlights

 

·      Revenue up 14% to £68.1 million

(2011 - £59.6 million)

 

·      Adjusted* EBITDA up 11% to £11.0 million

(2011 - £9.9 million)

 

·      Adjusted* pre-tax profit 4% higher at £7.6 million

(2011 - £7.3 million)

 

·      Statutory pre-tax profit of £7.5 million

(2011 - £7.3 million)

 

·      Adjusted* diluted EPS up 11% to 2.43 pence

(2011 - 2.19 pence)

 

·      Diluted EPS were 2.38 pence

(2011 - 2.22 pence)

 

·      Currently 194 restaurants trading

 

* excluding the impact of a £111,000 charge (2011 - £68,000 credit) for non-trading items (see note 6)

 

 

Enquiries


Prezzo plc

Tel: 020 8505 4782

Jonathan Kaye, Chief Executive


Alan Millar, Finance Director






Cenkos Securities

Tel: 020 7397 8900

Bobbie Hilliam




Media enquiries


Eddie Gershon (PR on behalf of Prezzo PLC)

Tel: 020 8352 5012

news@eddiegershon.com

Tel: 079 5639 2234



 

 

Prezzo Plc ("The Company")

 

Chairman's statement

 

I am pleased to report that, despite a challenging start to the year, the Company has delivered a solid performance over the first half of the year, with revenues up 14% to £68.1m (2011 - £59.6m) and adjusted* pre-tax profit up 4% to £7.6m (2011 - £7.3m).

Results

Revenue for the 26 weeks ended 1 July 2012 rose 14% from £59.6m to £68.1m, with gross or restaurant profit rising to £8.8m (2011 - £8.3m). Adjusted* EBITDA was up 11% to £11.0m (2011 - £9.9m) whilst adjusted* operating profit excluding non-trading items was up 5% to £7.6m (2011 - £7.2m).

Adjusted* pre-tax profit was up 4% at £7.6m (2011 - £7.3m) and after a £111,000 charge (2011 - £68,000 credit) for non-trading items (see details in note 4), stated pre-tax profit was £7.5m (2011 - £7.3m).

The effective tax rate for the period has been calculated at 26% (2011 - 30%). Adjusted* diluted earnings per share were 2.43p (2011 - 2.19p) and diluted earnings per share were 2.38p (2011 - 2.22p).

Estate development

We have launched 12 (2011 - 7) new restaurants during the period (3 of which were acquired from Caffe Uno late in 2011) and there were 193 (2011 - 168) units trading at the end of the period.

These openings included a new high profile London Prezzo, located within the newly-refurbished main concourse of the Kings Cross railway station, together with successful openings in the South and South East (Cobham, Arundel and Sevenoaks) as well as the North West (Southport and New Brighton, on the Wirral). There has also been a very busy opening programme for Chimichanga, with new restaurants launched in Bournemouth, Bromley and Crawley and our successful Mexican format is now trading from 20 locations.

Since the end of the period we have opened a further three restaurants, but we have also closed two restaurants, including the forced closure of our branch outside Victoria railway station where our lease has been terminated ahead of a major redevelopment of the terminus. Consequently we are currently trading from 194 (2011- 172) restaurants.

The pipeline for openings over the next 18 months is well-developed and the second half will see openings in several more major cities (Bristol, Bath and Manchester). By the end of 2012 we would anticipate having opened approximately 25 new restaurants and with the landmark of 200 restaurants fast approaching, we have been strengthening the Prezzo team and increasing investment in training, marketing and other support functions within the business.

Cash flows and financing

Cashflow generated from operations was £13.5m (2011 - £11.1m) and after £2.2m (2011 - £1.9m) of corporation tax payments, there was £11.4m (2011 - £9.2m) of free cash available for investment.

During the period, the cash outflow on property, plant & equipment was £12.5m (2011 - £8.3m) which covered capital expenditure on the fit out of new restaurants, as well as refurbishment and rebranding projects for the existing estate.

Overall, there was a net cash outflow of £0.8m (2011 - £0.7m inflow) and at the end of the period we had modest net borrowings of £0.7m (2011 - £6.0m net cash).

Nevertheless, we are comfortable that our strong cash generation, together with the £5m short-term borrowing facility currently in place and our portfolio of freehold properties will provide us with sufficient flexibility and resources to fund our anticipated expansion plans for the foreseeable future. As in previous years, no interim dividend will be paid.

Outlook

It would be fair to say that 2012, with its Royal Diamond Jubilee celebrations and an extremely successful Olympic Games In London, has been somewhat atypical and greater peaks and troughs in trading have presented both opportunities and challenges for restaurant operators.

The business has performed well over the summer months and while we have not seen any evidence of a sustained economic recovery, the Board remains confident of delivering further progress over the remainder of the year.

Michael Carlton

Chairman

5 September 2012

 

* excluding the impact of a £111,000 charge (2011 - £68,000 credit) for non-trading items (see note 6)

 

Prezzo Plc

 

condensed statement of comprehensive income

 




unaudited

unaudited

audited




26 weeks to

26 weeks to

52 weeks to




1 July

3 July

1 January




2012

2011

2012




£'000

£'000

£'000

Revenue

3


68,051

59,559

123,873

Cost of Sales



(59,241)

(51,233)

(105,221)

Gross profit



8,810

8,326

18,652

Administration expenses



(1,340)

(1,015)

(2,540)







Operating profit excluding non-trading items



7,581

7,243

16,427

Non-trading items

4


(111)

68

(315)







Operating profit



7,470

7,311

16,112

Finance income



(3)

17

19







Profit before tax



7,467

7,328

16,131

Income tax expense

5


(1,952)

(2,213)

(4,389)

Profit and total comprehensive income for the financial period



5,515

5,115

11,742







Earnings per share - basic

6


2.42p

2.26p

5.17p

Earnings per share - diluted

6


2.38p

2.22p

5.09p







 

condensed statement of changes in equity

 


Share

Share

Capital

Share

Retained

Total


Capital

Premium

Redemption

Option

Earnings

Equity




Reserve

Reserve




£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2012

11,385

21,331

168

1,751

44,172

78,807

Total comprehensive income for the financial period

-

-

-

-

5,515

5,515

Share-based payments - credit to equity for the period

-

-

-

33

-

33

Tax on share-based payments taken directly to equity

-

-

-

37

-

37

Transfer in respect of options exercised

-

-

-

(116)

116

-

Issue of new equity shares

62

255

-

-

-

317

Balance at 1 July 2012 (unaudited)

11,447

21,586

168

1,705

49,803

84,709








Balance at 2 January 2011

11,307

21,024

168

1,861

32,832

67,192

Total comprehensive income for the financial period

-

-

-

-

5,115

5,115

Share-based payments - credit to equity for the period

-

-

-

48

-

48

Tax on share-based payments taken directly to equity

-

-

-

106

-

106

Transfer in respect of options exercised

-

-

-

(76)

76

-

Issue of new equity shares

64

220

-

-

-

284

Balance at 3 July 2011 (unaudited)

11,371

21,244

168

1,939

38,023

72,745








Balance at 2 January 2011

11,307

21,024

168

1,861

32,832

67,192

Total comprehensive income for the financial period

-

-

-

-

11,742

11,742

Dividend paid

-

-

-

-

(511)

(511)

Share-based payments - credit to equity for the period

-

-

-

91

-

91

Tax on share-based payments taken directly to equity

-

-

-

(92)

-

(92)

Transfer in respect of options exercised

-

-

-

(109)

109

-

Issue of new equity shares

78

307

-

-

-

385

Balance at 1 January 2012 (audited)

11,385

21,331

168

1,751

44,172

78,807

 

condensed balance sheet

 



Unaudited

unaudited

audited



As at 1 July

As at 3 July

As at 1 January



2012

2011

2012



£'000

£'000

£'000

Non-current assets





Intangible assets


1,554

1,134

1,560

Property, plant and equipment


103,936

83,629

97,431

Pre-paid operating leases charges


4,352

3,394

4,307

Deferred tax asset


539

750

441



110,381

88,907

103,739

Current assets





Inventories


4,052

3,328

3,838

Prepaid operating lease charges


3,397

2,919

3,131

Trade and other receivables


2,269

1,980

3,925

Cash and cash equivalents


-

6,022

39



9,718

14,249

10,933

Total Assets


120,099

103,156

114,672

Current liabilities





Trade and other payables


(21,892)

(18,267)

(23,293)

Current tax liabilities


(3,409)

(3,493)

(3,842)

Bank overdraft


(737)

-

-



(26,038)

(21,760)

(27,135)

Non-current liabilities





Accruals


(3,642)

(3,162)

(3,316)

Deferred tax liabilities


(5,710)

(5,489)

(5,414)



(9,352)

(8,651)

(8,730)

Total liabilities


(35,390)

(30,411)

(35,865)

Net assets


84,709

72,745

78,807






Capital and reserves attributable to equity





Share capital


11,447

11,371

11,385

Share premium


21,586

21,244

21,331

Capital redemption reserve


168

168

168

Share option reserve


1,705

1,939

1,751

Retained earnings


49,803

38,023

44,172

Capital and reserves


84,709

72,745

78,807






 

condensed cash flow statement

 


Unaudited

unaudited

audited



26 weeks to

26 weeks to

52 weeks to



1 July

3 July

1 January



2012

2011

2012



£'000

£'000

£'000

Cash inflow from operating activities





Cash inflow from operating activities (See note 9)


13,543

11,182

22,112

Income tax paid


(2,150)

(1,945)

(3,736)

Net cash inflow from operating activities


11,393

9,237

18,376






Cash outflow from investing activities





Finance income


(3)

17

19

Payments to acquire property, plant and equipment


(12,483)

(8,266)

(22,343)

Proceeds from sale of property, plant and equipment


-

-

488

Acquisition


-

(569)

(1,694)

Net cash outflow from investing activities


(12,486)

(8,818)

(23,530)

Cash outflow from financing





Issue of new equity shares


317

284

385

Equity dividend paid


-

-

(511)

Net cash inflow/(outflow) from financing


317

284

(126)






Net increase/(decrease) in cash and cash equivalents


(776)

703

(5,280)

Cash and cash equivalents as at 1 January 2012


39

5,319

5,319

Cash and cash equivalents as at 1 July 2012


(737)

6,022

39






 

Notes to the condensed financial statements

 

1    General Information

Prezzo plc ("Prezzo") is a public limited company ("the Company") incorporated in the United Kingdom under the Companies Act 2006 (registration number 3919682). The Company is domiciled in the United Kingdom and its registered address is Johnston House, 8 Johnston Road, Woodford Green, IG8 0XA. The Company's ordinary shares are traded on the Alternative Investment Market ("AIM"). Copies of this Interim Report will be sent out to shareholders. Further copies of the Interim Report or the Annual Report and Accounts may be obtained from the above address or on the Investor Relations section of the Company's website at www.prezzorestaurants.co.uk.

 

2    Basis of preparation

The condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as endorsed by the European Union and in accordance with IAS34 - "Interim Financial Reporting". The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Company's latest annual audited financial statements.

The financial information for the period ended 1 January 2012 does not constitute the full statutory accounts for that period.  The Annual Report and Financial Statements for 2011 have been filed with the Registrar of Companies.  The Independent Auditors' Report on the Annual Report and Financial Statement for 2011 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.

The condensed financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

 

3    Revenue

Revenue is wholly attributable to the principal activity of the Company and arises solely within the UK.


4    Non-trading items


unaudited

unaudited

audited


26 weeks to

26 weeks to

52 weeks to


1 July

3 July

1 January


2012

2011

2012


£'000

£'000

£'000

Loss on sale of property, plant and equipment

-

-

18

Payment made in respect of termination of lease

-

-

75

Provision for onerous lease

-

-

135

Provision for impairment

103

-

10

Site abort costs

8

-

47

Expenses in connection with acquisition

-

86

184

Negative goodwill arising on acquisition

 

-

(154)

(154)


111

(68)

315





 

5    Income tax expense

The income tax charge for the 26 weeks to 1July 2012 has been calculated by applying the estimated effective corporation tax and deferred tax rates for the 52 weeks to 30 December 2012, to the profit before tax for the 26 weeks ending 1 July 2012. The full-year effective tax rate on profit before tax is estimated to be 26% (2011 H1: 30%).

 

6    Earnings per share


unaudited

unaudited

Audited


26 weeks to

26 weeks to

52 weeks to


1 July

3 July

1 January


2012

2011

2012


pence

pence

pence

Basic earnings per share

2.42

2.26

5.17

Diluted earnings per share

2.38

2.22

5.09

Adjusted earnings per share

2.47

2.23

5.30

Adjusted diluted earnings per share

2.43

2.19

5.21





Earnings per share has been calculated using the numbers shown below -


Unaudited

unaudited

audited


26 weeks to

26 weeks to

52 weeks to


1 July

3 July

1 January


2012

2011

2012


£'000

£'000

£'000

Profit for the financial period

5,515

5,115

11,742

Non trading items (see note 4)

111

(68)

315

Estimated taxation effect of non trading items

-

-

(37)

Adjusted profit for the financial period

5,626

5,047

12,020





 


Number

Number

Number

Weighted average number of ordinary shares in issue

228,135,470

226,425,563

226,912,191

Impact of dilutive share options

3,556,334

3,974,663

3,695,235

Diluted number of ordinary shares in issue

231,691,804

230,400,226

230,607,426

 

The weighted average number of ordinary shares is adjusted to take into account the dilutive impact of share options granted to employees. There were no options in issue that were non-dilutive (2011 H1 - nil) on the basis of the average share price during the period.

An adjusted earnings per share figure has been provided, principally to show the level of earnings per share before the impact of non-trading items as set out in note 4.

Adjusted profit before tax for headline reporting purposes was calculated as follows -


Unaudited

unaudited

audited


26 weeks to

26 weeks to

52 weeks to


1 July

3 July

1 January


2012

2011

2012


£'000

£'000

£'000

Profit before taxation

7,467

7,328

16,131

Non-trading items (see note 4)

111

(68)

315

Adjusted profit before taxation

7,578

7,260

16,446

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was £11,028,000 (2011 H1 - £9,911,000)

7    Purchase of property, plant and equipment

During the period there were additions to property, plant and equipment to the value of £10,435,000 (2011 H1 - £7,549,000), disposals of items of property, plant and equipment with a net book value of £386,000 (2011 H1 - £192,000) and there was a £98,000 (2011 - nil) impairment charge

 

8    Capital commitments


unaudited

unaudited

Audited


26 weeks to

26 weeks to

52 weeks to


1 July

3 July

1 January


2012

2011

2012


£'000

£'000

£'000

Authorised and contracted

2,373

4,097

1,432

 

9    Reconciliation of profit before tax to cash inflow from operating activities


unaudited

unaudited

audited


26 weeks to

26 weeks to

52 weeks to


1 July

3 July

1 January


2012

2011

2012


£'000

£'000

£'000

Profit before taxation

7,467

7,328

16,131

Finance income

3

(17)

(19)

Depreciation and amortisation

3,447

2,668

5,590

Share-based payment charge

33

48

91

Loss on disposal of property, plant, equipment and inventory

386

192

507

Impairment of property, plant and equipment

98

-

10

Impairment of goodwill

5

-

-

Negative goodwill recognised on acquisition

-

(154)

(154)

Increase in inventories

(214)

(272)

(782)

Decrease/(Increase) in receivables

1,345

1,560

(1,110)

Increase/(decrease) in payables

973

(171)

1,848

Cash inflow from operating activities

13,543

11,182

22,112





 

10   Risks and uncertainties

The principal risks and uncertainties faced by the Company are set out in the directors' report in the 2011 annual report and they will continue to represent risk during the remaining six months of the financial year.

There are a number of potential risks and uncertainties which could have a material impact on the Company's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The key risks include a more challenging economic climate with weaker consumer spending which could impact revenues, together with increased raw material and other operating costs which could increase pressure on margins.

The key areas of accounting estimates and judgements used in the preparation of the financial statements are set out in note 3 in the 2011 annual report. The estimates and assumptions considered to have a significant risk of causing a material adjustment to the carrying values of assets and liabilities in the accounts remain unchanged.

 

11   Related party transactions

During the period the Company did not enter into any new contracts with related parties (2011 H1 - none). Other than annual commitments under ongoing lease arrangements which were disclosed in note 24 of the 2011 annual report and accounts, there were no other related party transactions in the period.

The aggregate amount of remuneration paid to key management personnel during the period was £197,000 (2011 H1 - £190,000) and the aggregate gain on share options exercised in the period was £146,000 (2011 - £176,000).


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