Preliminary results for the 12 months ended 30 September 2017 - - PowerPoint PPT Presentation

Preliminary results for the 12 months ended 30 September 2017

November 2017

PATISSERIE HOLDINGS PLC

Highlights 2 Financial Performance 4 Operational Progress 10 Current Trading and Outlook 18

Contents

HIGHLIGHTS

3

Full Year to 30 September 2017 - Highlights

• Revenue up 9.7% to £114.2m (2016: £104.1m)
• EBITDA up 15.7% to £25.6m (2016: £22.2m)
• Pre tax profits up 17.1% to £20.2m (2016: £17.2m)
• Diluted EPS growth of 19.1% to 16.20 pence per

share (2016: 13.60 pence per share)

• Operating cash flow of £24.4m, with year end cash

balances of £21.5m

• Final dividend of 2.40 pence per share proposed up

20%

• 20 new stores opened all funded from operating

cash flow

• First two new stores opened in Republic of

Ireland

• Costs tightly controlled with inflationary wage and

ingredient cost pressures managed in the year.

FINANCIAL PERFORMANCE

Financial Overview

DELIVERING STRONG GROWTH AND HIGH LEVELS OF CASH CONVERSION WITH THE ABILITY TO CONTINUE TO SELF-FINANCE NEW STORE ROLLOUT

5

Revenue (£m) Group EBITDA (£m) Cash flow from operations (£m) Year Ended 30 September 2017

42.8 51.3 62.9 73.9 84.3 17.3 25.3 29.0 30.2 29.9 60.1 76.6 91.9 104.1 114.2

• 10

20 30 40 50 60 70 80 90 100 110 120 FY2013A FY2014A FY2015A FY2016A FY2017A Patisserie Valerie Other Brands 10.5 8.4 18.3 22.0 24.4 87% 76% 98% 99% 95%

• 20.0%

40.0% 60.0% 80.0% 100.0%

• 5

10 15 20 25 FY2013A FY2014A FY2015A FY2016A FY2017A Cash from operations Cash conversion 12.0 15.3 18.8 22.2 25.6 20.0% 20.0% 20.4% 21.3% 22.4%

• 3.0%

6.0% 9.0% 12.0% 15.0% 18.0% 21.0%

• 3

6 9 12 15 18 21 24 27 FY2013A FY2014A FY2015A FY2016A FY2017A EBITDA EBITDA margin

Group Income Statement

12 months ended 12 months ended 30 September 2017 30 September 2016 £’000 £’000 Total Total % change Continuing operations Revenue 114,197 104,141 +9.7% Cost of sales (24,931) (22,832) Gross profit 89,266 81,309 +9.8% Administrative expenses (69,121) (64,099) EBITDA 25,636 22,161 +15.8% EBITDA margin 22.4% 21.3% Operating profit 20,145 17,210 +17.1% Net finance income / (expense) 8 (6) Profit before income tax 20,153 17,204 +17.1% Income tax expense (3,789) (3,469) Profit after tax and total comprehensive income for the year attributable to equity holders 16,364 13,735 +19.1% Earnings per share Basic earnings per share (pence) 16.36 13.74 +19.1% Diluted earnings per share (pence) 16.20 13.60 +19.1% Final dividend per share (pence) 2.40 2.00 +20.0%

• Revenue up 9.7% to £114.2m (2016:

£104.1m).

• Online sales up 26% to £4.8m

(2016: £3.8m).

• Gross margin of 78.2% maintained

despite cost pressures (2016: 78.1%).

• Inflationary pressures mitigated

through purchasing efficiencies and economies of scale.

• Improvement in EBITDA margin of

1.1% to 22.4% (2016: 21.3%) through

• perational leverage.
• Profit before tax up £3.0m or 17.1%

to £20.2m (2016: £17.2m).

• Tax charge benefits from reduction

in Corporation tax rate.

• Diluted EPS growth of 19.1% to

16.20 pence per share (2016: 13.60 pence per share).

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7

EBITDA Analysis

• Improvement in EBITDA mainly

driven by impact of new store

• penings
• In year openings contribute

£1.8m

• Prior year openings contribute

£1.5m

• In year closures erode EBITDA

by £0.2m

• Tightly controlled purchasing and

production efficiencies offset inflationary increases resulting in minor gross profit improvement

• f £0.2m.
• Pay increases of £0.4m partially
• ffset by more efficient rostering

and small central cost rationalisation.

• £0.2m increase from rent and

rates reviews.

• Number of contracts for non-

direct spend renegotiated in year.

25,635 224 376 236 1,794 1,499 218 278

• 525

22,159 20,000 22,000 24,000 26,000 2016 EBITDA New stores openings Full year impact of PY openings Closed stores GP improvements Pay increases Pay rostering Rent & rates increases Other 2017 EBITDA £'000

EBITDA Bridge

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Group Cash Flow

12 months ended 30 September 12 months ended 30 September 2017 2016 £’000 £’000 Cash flows from operating activities Profit before income tax

20,153 17,204

Adjusted by: Depreciation and amortisation

5,491 4,951

Net finance charges in the consolidated statement

• f comprehensive income

(8) 6

Other non-cash charges

317 333

Changes in working capital

(1,591) (536)

Cash generated from operations

24,362 21,958

Net interest received / (paid)

8 (6)

Income tax paid

(3,962) (3,378)

Net cash generated from operating activities

20,408 18,574

Net cash used in investing activities

(9,381) (8,726)

Net cash generated used in financing activities

(2,775) (2,670)

Net increase in cash and cash equivalents

8,252 7,178

Cash and cash equivalents at the beginning of the year

13,273 6,095

Cash and cash equivalents at the end of the year

21,525 13,273

• Highly predictable and resilient

cash flows to fund ongoing new store rollout programme.

• Operating cash flow of £24.4m up

10.9% with free cash flows of £11.0m

• Excellent EBITDA to cash

conversion rate of 95%

• Investing cash flows includes

capital investment in the year of £8.6m in new stores, estate refresh and central infrastructure.

• Dividends of £3.2m paid in the

year with £0.4m received from exercise of employee share

• ptions.

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Group Balance Sheet

• Strong balance sheet maintained

solely funded by equity and reserves – no external borrowings.

• Cash balance at year end of

£21.5m - well positioned to self- fund ongoing roll-out programme and acquisitions.

• Store ROI measured against a 24

month payback period with the majority of stores performing within this target.

• Final dividend of 2.40 pence per

share proposed (total of £2.4m).

At 30 At 30 September September 2017 2016 £’000 £’000

ASSETS Non-current assets Intangible assets

17,747 17,797

Property, plant and equipment

39,674 36,498 57,421 54,295

Current assets Trade and other receivables including prepayment

13,995 12,900

Inventories

5,980 4,862

Cash and cash equivalents

21,525 13,273 41,500 31,035

Total assets

98,921 85,330

EQUITY AND LIABILITIES Total equity

92,332 78,195

Non-current liabilities Deferred tax

1,422 2,054 1,422 2,054

Current liabilities Trade and other payables

5,167 5,081

Total liabilities

6,589 7,135

Total equity and liabilities

98,921 85,330

OPERATIONAL PROGRESS

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Store Roll Out

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• 20 new stores opened in the year

with a number of strong profit contributors.

• All new stores profitable from
• pening and funded from operating

cashflows.

• Expansion outside England

continues:

• Two new stores opened in

Republic of Ireland

• Second store opened in Northern

Ireland

• Two new stores opened in

Scotland bringing total to 12

• New geographical locations include:

The Lexicon - Bracknell

• Dundee
• Middlesbrough
• Huddersfield
• Ashford
• Blanchardstown
• Dublin
• Northampton
• Winchester
• Southport
• Stevenage
• Bracknell
• Guildford

Store Roll Out (continued)

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• Three retail park openings at

McArthur Glen Ashford, Rushden Lakes Northampton and The Lexicon Bracknell. Retail park locations continue to deliver strong results.

• Seven openings within

Debenhams stores in the year bringing total to 16. The arrangement enables entry to high streets on favourable rent terms.

• First store opened under the

Philpotts brand at Spinningfields Manchester. Excellent trading to date indicates roll-out potential.

• Northern Ireland and Republic
• f Ireland stores trading ahead
• f expectations.

McArthur Glenn Ashford Philpotts Manchester Spinningfields Rushden Lakes Northampton Dublin

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Sainsbury’s Trial

• In April, launched a

supply only trial with Sainsbury’s.

• Product being sold

within Sainsbury’s bakery department from Patisserie Valerie branded counters.

• Currently trading

from 31 Sainsbury’s stores and online via “click and collect”.

E-Commerce

14

• Digital sales up 26% to £4.8m

(2016: £3.8m).

• Continuous growth in Cake

Club membership and social media followers.

• Facebook members up over

100% due to customer engagement strategy

• Facebook engagement ratio

highest of our competitors

• Create-a-cake still best selling
• nline product

Member / Followers 2017 2016 Growth % 404,300 361,300 43,000 11.9% 140,300 70,000 70,300 100.4% 24,900 15,900 9,000 56.6% 19,200 12,900 6,300 48.8%

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Website Relaunch

• New website in development

which is to be launched in H1 2018

• Enhanced content will improve

user experience

• Simpler navigation
• Tablet and mobile compatible
• New product video imaging
• Improved payment gateway

New Product Development

16

• New Product Development team

established to enhance product range.

• Dine in menu refreshed with number of

new items added.

• Madam Valerie gateau and slice added to

patisserie range.

• Festive range launched in November

including festive hot drinks, festive afternoon tea, apple and mincemeat Danish and two new limited edition slices.

• Gift range launched in partnership with

Debenhams.

• New product ranges added in prior year

selling well and continue to give customers choice:

• Glorious Gluten Free range
• Online Corporate menu
• Afternoon Tea selling in all locations

with a number of variants.

Patisserie Holdings remains an attractive equity story

ATTRACTIVE MARKET BACKDROP

• UK eating out market estimated to be worth £70bn+
• Patisserie Valerie is favourably positioned across the two

fastest growing sub-sectors − Coffee shops − Branded casual dining

• Market growth underpinned by long term socio-economic

changes

• Branded coffee shop outlet numbers and revenue expected

to grow by 6% CAGR and 12% CAGR respectively over the next 5 years

VERY STRONG PLATFORM ESTABLISHED

• Critical mass already achieved

− trading from 199 stores − EBITDA margins of 22%

• All stores now deliver positive contributions; 60% generate

>£100k EBITDA

• Scalable, hub and spoke model perfected

− further economies of scale available

• Highly experienced management team with proven sector track

record

• Vertically integrated model with fully owned logistics

A PROVEN GROWTH STORY

• Focused on rollout of 20 new sites per annum
• Historic growth has been strong

− number of stores increased from 8 to 199 in 11 years

• 2017 EBITDA £25.6m
• 250+ potential new sites

− formulaic new store model, generating payback of 23 months vs. target 24 months

• Capable of funding new stores through internally generated

cash flow

• Board committed to progressive dividend policy

THE PATISSERIE VALERIE CONCEPT

• A leading UK branded café and casual dining group
• All day trading format and affordable proposition
• Five proven brands
• High quality products, almost all made in-house from scratch
• Very wide customer demographic and appeal
• Proven across different store formats and geographies

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CURRENT TRADING AND OUTLOOK

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Central Infrastructure

19

• Reviewing options to create

additional production capacity including:

• Investment in additional

production facility in the Manchester area to support expansion – expected to be completed in H2 FY2018.

• In-store bake-off of morning

goods removing demand at existing facilities whilst improving customer experience – expected to be completed in H1 FY2018.

• Bakeries opened in prior year in

Leith, Edinburgh and Belfast, Northern Ireland operating successfully.

• Realising efficiencies from

investment in central bakery in prior year.

Pipeline for the Year Ahead

20

• Strong pipeline for FY2018 with

four openings since the year end:

• Wigan
• Glasgow Debenhams
• Liverpool
• Basingstoke
• Two stores due to open shortly:
• Cwmbran
• Chesterfield
• Exchanged contracts on two sites

and at advanced stage on a further five locations.

• On track for 20 openings in

FY2018.

Basingstoke

Current Trading & Outlook

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• Performance of first eight weeks of 2018 inline

with expectations.

• Exciting new festive range launched.
• Four stores opened since the year end with

strong pipeline for new stores.

• Final dividend of 2.4 pence per share proposed

subject to shareholder approval. “Highly cash generative and resilient operations with strong balance sheet and focused management team gives confidence in delivering another year of growth”

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