REG - Prezzo PLC - Half Yearly Report

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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END

 

 

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