Preliminary Results

RNS Number : 7511I

Tasty PLC

30 March 2015

 

Tasty plc

("Tasty" or the "Company")

Preliminary results for the 52 weeks ended 28 December 2014

Highlights:

·     Revenue up 28% to £29,734,000  (2013 - £23,192,000)

·     Gross profit up 26% to £3,527,000  (2013 - £2,806,000)

·     Profit before tax up 46% to £2,552,000 (2013 - £1,742,000)

·     Seven new Wildwood and Wildwood Kitchen restaurants opened in the year

·     Three new restaurants have opened since the year end

·     A number of other sites in the pipeline at various stages of completion

Enquiries:

Tasty plc                                                                                Tel: [phone]

Jonny Plant, Chief Executive

Cenkos Securities                                                             Tel: [phone]

Bobbie Hilliam

Harry Pardoe

Chairman's statement

I am pleased to be reporting on the Group's profitable results of £2,052,000 (December 2013 - £1,442,000).  The results are for the 52 week period ended 28 December 2014 and a comparative of the 52 week period ended 29 December 2013.

Results

Revenue for the year was up 28% on last year to £29,734,000  (2013 - £23,192,000).  Operating profit before pre-opening costs and non-trading items was up 34% on last year at £3,090,000 (2013 - £2,301,000 ).  Pre-opening costs for the period totalled £360,000 (2013 - £259,000).

The overall statutory pre-tax profit was up by some 46% at £2,552,000 (2013 - £1,742,000).

The Board does not recommend the payment of a dividend at this stage of the Group's development.

Openings

Seven new Wildwood and Wildwood Kitchen restaurants were opened during the year: Oakham and Salisbury opened in March.  Camberley, Nottingham and Ludlow were all opened in August with Bristol and Wantage opening in November and December respectively.

Since the year end a further three sites have been opened and a number of other sites are already in the pipeline, at various stages of completion and negotiation.

Cash flows

Net cash outflow for the period before financing was £1,061,000 (2013 - £1,531,000).  This is largely represented by capital expenditure on the expansion of the business through the opening of the above sites. Cash flows from operating activities increased to £5,308,000 (2013 - £3,238,000). 

The Company continued to have access to its banking facility of £4,000,000 (£1,000,000 term loan and £3,000,000 revolving facility which remains unused).  During the year the Company repaid £250,000 of the term loan.  As at 28 December 2014 the balance of the Company's term loan was £750,000.

Cash and cash equivalents held at the end of the period were £2,044,000 (2013 - £3,407,000).

Review of the business

The Group delivered another strong performance in 2014, with an improvement in operating profit margin and a 46% increase in pre-tax profits. 

The Group continued its expansion during the year, adding seven new sites to the estate.  The rate of development will accelerate in the medium term.  Openings in the coming 12 months will expand the UK geographical footprint of the estate.

At the end of the period the Group operated 36 restaurants.  Currently, the Group has 39 restaurants in operation - 6 DimTs, 32 Wildwoods and Wildwood Kitchens and 1 other.

Pre-opening costs and accounting adjustments

Pre-opening costs have been highlighted in the income statement as these costs represent revenue expenses, such as rent, rates and training costs, which are necessarily incurred in the period before a new unit is opened, but which are specific to the opening of that unit and not part of the Group's normal ongoing trading performance. The Group recognises a number of charges in the accounts which arise under accounting rules which have no transactional cash impact.  These charges include share based payments.

Staff

As ever, it is our dedicated staff that have contributed significantly throughout the year to the Group's much improved performance, and I would like to take this opportunity of thanking them again for their hard work and effort.

Current Trading

Since the year end trading has been in line with expectations.

Keith Lassman

Chairman

30 March 2015

Strategic report

Business review and key performance indicators

Revenue for the 52 week period increased 28% on last year to £29,734,000 (2013 - £23,192,000).  Operating profit before pre-opening costs and non-operating items was £3,090,000 (2013 - £2,301,000).  Pre-opening costs for the period totalled £360,000 (2013 - £259,000). The overall statutory pre-tax profit was £2,552,000 (2013 - £1,742,000).

The Directors utilise a large number of detailed performance indicators which are used to manage the business but, as with most businesses, the focus in the Income Statement at the top level is on sales, margins and overheads compared to budget and the previous year. In the balance sheet the focus is on managing working capital.

The Directors recognise the importance of customer relations and staff are extensively trained in this regard.  Performance is monitored by reference to the results of regular mystery diner visits and staff bonuses are calculated with the results and comments arising from these visits and other customer feedback.

A further review of the business is included in the Chairman's Statement.

Principal uncertainties and risks

Economic conditions

There have been a number of encouraging signs regarding the UK economic outlook.  However, there still remains a high level of uncertainty.  Deterioration in consumer confidence due to future economic conditions could have a detrimental impact on the Group in terms of footfall and sales.  This risk is mitigated by the positioning of the Group's brands, which is within the affordable segment of the casual dining market.  Continued focus on customer relations and targeted and adaptable marketing initiatives help the Group retain and drive sales where footfall declines.

Input cost inflation

The Group's key variable inputs are the cost of food and labour, both of which face inflationary pressures in the medium term.  The Group monitors its food supply chain closely, regularly reviewing food costs and implementing a variety of strategies to mitigate the impact of increases.  Labour cost pressures which are outside of the control of the Group, such as the recently introduced auto enrolment pension costs and minimum wage increases, are suffered by the Group and its competitors.  However, labour costs are regularly monitored and on-going initiatives are used to reduce the impact of such pressures.

Strategic risks

The acquisition of suitable and well located quality sites in order to continue the Group's expansion is proving to be demanding.  The Group has a strong and experienced property acquisition team with good relationships with external agents and advisers.

On behalf of the Board.

Jonny Plant
Joint Chief Executive Officer

30 March 2015

Consolidated statement of comprehensive income for the 52 weeks ended 28 December 2014

				2014		2013
				£'000		£'000
	Revenue			29,734		23,192
	Cost of sales			(26,207)		(20,386)
	Gross profit			3,527		2,806
	Administrative costs			(901)		(944)
	Operating profit excluding non-trading items and pre-opening costs			3,090		2,301
	Pre-opening costs			(360)		(259)
	Non-trading items			(104)		(180)
	Operating profit			2,626		1,862
	Finance income			9		14
	Finance expense			(83)		(134)
	Profit before tax			2,552		1,742
	Income tax expense			(500)		(300)
	Profit and total comprehensive income for the period attributable to shareholders			2,052		1,442
	Earnings per share
	Basic			3.88p		2.95p
	Diluted			3.83p		2.90p

Consolidated statement of changes in equity for the 52 weeks ended 28 December 2014

		Share capital	Share premium	Merger reserve	Retained deficit	Total
		£'000	£'000	£'000	£'000	£'000
	Balance at 30 December 2012	4,790	10,359	992	(3,794)	12,347
	Issue of ordinary shares	503	2,958	-	-	3,461
	Total comprehensive income for the period	-	-	-	1,442	1,442
	Share based payments - credit to equity	-	-	-	195	195
	Balance at 29 December 2013	5,293	13,317	992	(2,157)	17,445
	Issue of ordinary shares	12	19	-	-	31
	Total comprehensive income for the period	-	-	-	2,052	2,052
	Share based payments - credit to equity	-	-	-	104	104
	Balance at 28 December 2014	5,305	13,336	992	(1)	19,632

Consolidated balance sheet at 28 December 2014

				2014		2013
				£'000		£'000
	Non-current assets
	Intangible assets			444		446
	Property, plant and equipment			20,391		15,384
	Pre-paid operating lease charges			1,731		1,895
	Other non-current assets			341		381
				22,907		18,106
	Current assets
	Inventories			1,051		811
	Trade and other receivables			1,801		1,350
	Pre-paid operating lease charges			152		152
	Cash and cash equivalents			2,044		3,407
				5,048		5,720
	Total assets			27,955		23,826
	Current liabilities
	Trade and other payables			(6,536)		(5,009)
	Borrowings			(500)		(250)
				(7,036)		(5,259)
	Non-current liabilities
	Provisions			(55)		(65)
	Lease incentives			(367)		(192)
	Deferred tax liability			(615)		(115)
	Long-term borrowings			(250)		(750)
				(1,287)		(1,122)
	Total liabilities			(8,323)		(6,381)
	Total net assets			19,632		17,445
	Equity
	Share capital			5,305		5,293
	Share premium			13,336		13,317
	Merger reserve			992		992
	Retained deficit			(1)		(2,157)
	Total equity			19,632		17,445

Consolidated cash flow statement for the 52 weeks ended 28 December 2014

				2014		2013
				£'000		£'000
	Operating activities
	Cash generated from operations			5,308		3,238
	Corporation tax paid			-		-
	Net cash inflow from operating activities			5,308		3,238
	Investing activities
	Purchase of property, plant and equipment			(6,378)		(4,783)
	Interest received			9		14
	Net cash flows used in investing activities			(6,369)		(4,769)
	Financing activities
	Net proceeds from issues of ordinary shares			31		3,461
	Bank loan receipt			-		1,500
	Bank loan repayment			(250)		(1,500)
	Interest paid			(83)		(134)
	Net cash flows used in financing activities			(302)		3,327
	Net increase in cash and cash equivalents			(1,363)		1,796
	Cash and cash equivalents as at 29 December 2013			3,407		1,611
	Cash and cash equivalents as at 28 December 2014			2,044		3,407

Notes forming part of the financial statements for the 52 weeks ended 28 December 2014

1      Basis of consolidation

The financial information in these preliminary results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). They are presented in pounds sterling, rounded to the nearest thousand. 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 2013 Report and Accounts.

The financial information set out in this announcement does not constitute the Company's statutory accounts for the 52 weeks ended 28 December 2014 or the 52 weeks ended 29 December 2013. Statutory accounts for the 52 weeks ended 28 December 2014 and the 52 weeks ended 29 December 2013 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statement 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.

The Annual Report and Financial Statements for 2013 have been filed with the Registrar of Companies. The statutory accounts for the 52 weeks ended 28 December 2014 will be delivered to the Registrar in due course.
 

2      Revenue 

Revenue represents amounts received and receivable for goods and services provided (excluding value added tax) in the normal course of business.  Revenue is recognised at the point goods and services are provided.

3      Operating profit

				2014		2013
	This has been arrived at after charging			£'000		£'000
	Staff costs			10,691		8,115
	Share based payments			104		195
	Operating lease rentals			3,101		2,630
	Amortisation of intangible assets			2		2
	Depreciation			1,310		1,222
	Amortisation of prepaid operating leases			164		213
	Loss on disposal			61		83
	Auditor remuneration:
	Audit fee          - Parent Company			8		8
	- Group financial statements			10		8
	- Subsidiary undertaking			20		17
	Other services - Taxation compliance			6		6
	- Other taxation advisory			6		24

4      Finance expense

				2014		2013
				£'000		£'000
	Loan interest payable			83		134
				83		134

5      Employees

				2014		2013
	Staff costs (including directors) consist of			£'000		£'000
	Wages and salaries			9,779		7,520
	Social security costs			849		564
	Other pension costs			63		31
	Equity settled share based payment expense			104		195
				10,795		8,310

The average number of persons, including directors, employed by the Group during the period was 642, of which 634 were restaurant staff and 8 were administration staff, (2013 - 506 of which 498 were restaurant staff and 8 were administration staff). 

Of the total staff costs £10,099,000 was classified as cost of sales (2013 - £7,566,000) and £788,000 as administrative expenses (2013 - £744,000). 
 

6      Income tax expense

				2014		2013
				£'000		£'000
	UK Corporation tax
	Current tax on profits for the period			-		-
	Total current tax			-		-
	Deferred tax
	Utilisation of tax losses			(282)		(173)
	Origination and reversal of temporary differences			(218)		(127)
	Impact of change in future rate of taxation			-		-
	Total deferred tax			(500)		(300)
	Total income tax charge			(500)		(300)

The tax charge for the period is lower than the standard rate of corporation tax in the UK.  The differences are explained below:

				2014		2013
				£'000		£'000
	Profit before tax			2,552		1,742
	Tax on profit at the ordinary rate of corporation
	tax in UK of 21.5% (2013 - 23.25%)			549		405
	Effects of
	Expenses not deductible for tax			8		8
	Depreciation on ineligible fixed assets			63		63
	Utilisation of tax losses			(120)		(176)
	Total tax charge			500		300

7      Earnings per share

				2014		2013
				pence		Pence
	Basic earnings per ordinary share			3.88		2.95
	Diluted earnings per ordinary share			3.83		2.90
				2014		2013
				Number '000		Number '000
	Earnings per share have been calculated using the numbers shown below:
	Weighted average ordinary shares (basic)			52,954		48,896
	Weighted average ordinary shares (diluted)			53,616		49,734
				2014		2013
				£'000		£'000
	Profit for the financial period			2,052		1,442

1,071,888 share options have been used when calculating the diluted EPS (2013 - 1,498,992).  2,021,785 share options have been excluded when calculating the diluted EPS as they were anti-dilutive (2013 - 95,000).

8      Dividend

No final dividend has been proposed by the Directors (2013 - nil).

9      Intangibles

				Trademarks	Goodwill	Total
				£'000	£'000	£'000
	At 30 December 2012			7	441	448
	Amortisation of trademarks			(2)	-	(2)
	At 29 December 2013			5	441	446
	Amortisation of trademarks			(2)	-	(2)
	At 28 December 2014			3	441	444

The recoverable amount of goodwill has been determined on a value in use basis.  This has been based on the performance of the units since they were acquired and management's forecasts, which assume the sites will perform at least as well as the market generally.  The forecast cash flows are discounted at a rate of 10%.

10   Property, plant and equipment

			Leasehold improvements	Furniture fixtures and computer equipment	Assets in the course of construction	Total
			£'000	£'000	£'000	£'000
	Cost
	At 30 December 2012		11,777	4,363	136	16,276
	Additions		3,299	1,161	323	4,783
	Disposals		(37)	(142)	(25)	(204)
	Transfers		89	47	(136)	-
	At 29 December 2013		15,128	5,429	298	20,855
	Additions		4,736	1,462	180	6,378
	Disposals		(120)	(11)	-	(131)
	Transfers		197	85	(282)	-
	At 28 December 2014		19,941	6,965	196	27,102
	Depreciation
	At 30 December 2012		2,902	1,583	-	4,485
	Provided for the period		618	504	-	1,122
	Disposals		(37)	(84)		(121)
	Impairment reversal		(15)	-	-	(15)
	At 29 December 2013		3,468	2,003	-	5,471
	Provided for the period		748	562	-	1,310
	Disposals		(62)	(8)	-	(70)
	At 28 December 2014		4,154	2,557	-	6,711
	Net book value
	At 28 December 2014		15,787	4,408	196	20,391
	At 29 December 2013		11,660	3,426	298	15,384

11   Prepaid operating leases

				2014		2013
				£'000		£'000
	Held within current assets			152		152
	Held within non-current assets			1,731		1,895
				1,883		2,047

Prepaid operating leases represent lease premiums paid on the acquisition of sites, amortised evenly over the lease term.

12   Inventories

				2014		2013
				£'000		£'000
	Raw materials and consumables			531		389
	Crockery and utensils			520		422
				1,051		811

In the Directors' opinion there is no material difference between the replacement cost of stocks and the amounts stated above.  Inventory purchased and recognised as an expense in the period is £7,145,000 (2013 - £5,242,000).

13   Trade and other receivables

				2014		2013
				£'000		£'000
	Group
	Trade receivables			353		170
	Prepayments and other receivables			1,789		1,561
	Total trade and other receivables			2,142		1,731
	Less non-current portion			(341)		(381)
				1,801		1,350

14   Trade and other payables

				2014		2013
				£'000		£'000
	Trade payables			3,422		2,178
	Taxation and social security			957		724
	Accruals			1,803		1,845
	Other payables			354		262
				6,536		5,009

15   Provisions

				2014		2013
				£'000		£'000
	At 29 December 2013			65		75
	Utilisation in period			(10)		(10)
	At 28 December 2014			55		65

16   Deferred tax

				2014		2013
				£'000		£'000
	At 29 December 2013			(115)		185
	Profit and loss charge			(500)		(300)
				(615)		(115)
	Accelerated capital allowances			(766)		(551)
	Tax losses carried forward			151		436
	At 28 December 2014			(615)		(115)

17   Borrowings

				2014		2013
				£'000		£'000
	Current
	Secured bank borrowings			500		250
				500		250
	Non-current
	Secured bank borrowings			250		750
				250		750
				750		1,000
	Maturity of secured bank borrowings
	Due within one year			500		250
	Due In more than one year but less than two years			250		500
	Due In more than two years but less than five years			-		250
				750		1,000

Bank borrowings comprise of a term loan.  The Group has an additional committed facility of £3,000,000 of which £nil was drawn down at the balance sheet date.  There were no instances of default, including covenant terms, in either the current or prior period. 

18   Share capital

				Number		£'000
	Authorised, issued, called up and fully paid:
	At 30 December 2012			47,902,949		4,790
	Exercise of share options			2,514,152		252
	Share placement			2,510,000		251
	At 29 December 2013			52,927,101		5,293
	Exercise of share options			121,335		12
	Share placement			-		-
	At 28 December 2014			53,048,436		5,305

19   Reserves

Share capital comprises of the nominal value of the issued shares.

Share premium reserve is the amount subscribed in excess of the nominal value of shares net of issue costs. 

Cumulative gains and losses recognised in the income statement are shown in the Retained deficit reserves, together with other items taken direct to equity.

The merger reserve is the difference between the nominal value of shares issued and the nominal value of shares acquired on merger. 

20   Capital commitments

At the balance sheet date the Group and the Company had no capital commitments which were contracted but not provided for (2013 - £nil). Capital commitments relate to committed expenditure in respect of restaurants under construction.

21   Operating lease commitments

The total future value of minimum lease payments under non-cancellable operating leases are shown below.  The receipts are from sub-tenants on contractual sub-leases, the net position represents the cash liability of the Group.

				2014		2013
				£'000		£'000
	Within one year: payments			3,016		2,756
	Within one year: receipts			(230)		(230)
				2,786		2,526
	Within two to five years: payments			12,663		10,953
	Within two to five years: receipts			(920)		(920)
				11,743		10,033
	Over five years: payments			40,759		31,500
	Over five years: receipts			(4,086)		(4,086)
				36,673		27,414
				51,202		39,973

22   Pensions

The Group, last year, made contributions of £nil to the personal pension plan of the Directors. The total amount paid during the period was £nil.  During the year the Group made contributions to employee pensions of £63,000 (2013 - £31,000).

23   Share based payments

				Weighted average exercise price		Number
				(pence)		'000
	At 30 December 2012			44.2		4,108
	Exercised			44.6		(2,514)
	At 29 December 2013			44.2		1,594
	Exercised / cancelled			26.9		(522)
	Granted			101.4		2,042
	At 28 December 2014			80.6		3,114

The exercise price of options outstanding at the end of the period ranged between 18p and 112p (2013 - 18p and 87.5p) and their weighted average remaining contractual life was 8 years (2013 - 4 years).

Of the total number of options outstanding at the end of period 1,071,888 (2013 - 1,593,992) had vested and were exercisable at the end of the period.

The market price of the Company's ordinary shares as at 28 December 2014 was 112p and the range during the financial year was from 89p to 125p.

On 11 October 2013 the Company's subsidiary issued 1,800,000 'A' ordinary shares of £0.0001 each that carry rights enabling the holder of those 'A' ordinary shares to exchange such shares for ordinary shares in the Company subject to the share price of the Company remaining at or above £1.50 for fifteen consecutive days.   'A' ordinary shares convey similar rights to the holder as EMI options with an exercise price of £1.00 and have been valued as a share based payment with conditional performance options. 

On 27 February 2014 the Company established a Company Share Option Plan ("CSOP") and issued 221,785 CSOP options with an exercise price of 112p and vesting period of 3 years. 

In the current period 121,335 (2013 - 2,514,152) options were exercised. The weighted average share price at the date of exercise was 26.9p (2013 - 100p)

 

END

 

 

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