9th Dec 2008 07:00
9 December 2008
Preliminary Results for 53 weeks ended 28 September 2008
Carluccio's continues to deliver strong growth
Carluccio's PLC (the Company), the leading UK group of authentic Italian restaurants with integrated food shops, is pleased to announce its preliminary results for 2008.
|
53 weeks |
52 weeks |
||||
|
to 28 |
to 23 |
||||
|
September |
September |
||||
|
2008 |
2007 |
change |
|||
|
Revenue (£m) |
64.1 |
53.3 |
+20% |
||
|
EBITDA (£m)* |
7.5 |
6.4 |
+17% |
||
|
Cash flow from operations before tax (£m) |
8.8 |
8.0 |
+10% |
||
|
Profit before tax (£m) |
5.6 |
4.9 |
+14% |
||
|
Diluted earnings per share (pence) |
6.2 |
5.9 |
+5% |
||
|
Adjusted diluted earnings per share (pence)** |
8.3 |
7.8 |
+6% |
||
|
Total dividend (pence)*** |
2.3 |
2.2 |
+5% |
||
|
Cash and cash equivalents |
3.6 |
3.1 |
+14% |
*See note 6
**Diluted earnings per share adjusted for pre-opening expenses and share based payments. See note 5
***Interim dividend of 0.7p paid in June 2008 (2007: 0.6p)
Highlights
6 new stores opened including the Company's first store under franchise in Dublin, Ireland
41 Carluccio's open and trading with three locations already opened since the year end impacting 2008 pre-opening costs
Pipeline for 2009 set to deliver at least the Company's five store minimum opening commitment
Measured international expansion continues with a second franchise agreement signed for 6 countries in the Middle East with Landmark Group, one of the largest retail groups in the Middle East and India. The first store is expected to open in 2009
Strong cash generation in the face of a sharp downturn in economic activity:
Debt free structure
Cash generated from operating activities before tax of £8.8m
Year end cash balance of £3.6m
Opening programme financed from internally generated cash flow
Recommended final dividend payment of 1.6p per ordinary share (2.3p for the full year)
Stephen Gee, Executive Chairman, said: "I am delighted to report our seventh year of uninterrupted double digit growth in revenue and profit before tax. Six new Carluccio's were opened during the financial year, including our first franchise store in Dublin, Ireland. Since the year end a further three have opened taking the total number of Carluccio's stores to 41. Our business continues to be highly cash generative, the benefit being that we can finance our opening programme out of internally generated cash flow whilst remaining debt free.
"Many years of successful profit growth and cash generation have only been achieved due to the dedication and commitment of our staff at all levels of the organisation. This has been recognised by our peers in giving us more than 20 awards both for our restaurants and our shops. Most recently at the London Restaurant Awards we were voted "Best Chain Restaurant" and Good Housekeeping accorded us the accolade of "Best Gourmet Food Retailer".
"Trading since 28 September 2008 has been satisfactory, achieved without significant discounting and in line with Board expectations. The economy faces extremely challenging times in the months ahead but I believe that our unique, debt free, all day trading business model allied with competitive pricing and relentless customer focus should stand us in good stead."
For further information, please contact:
|
Carluccio's PLC |
020 7580 3050 |
|
Simon Kossoff, Managing Director |
|
|
Frank Bandura, Finance Director |
|
|
Hogarth Partnership Limited |
020 7357 9477 |
|
Fiona Noblet |
|
|
Anna Keeble |
|
|
Altium Capital Limited |
|
|
Ben Thorne |
020 7484 4024 |
|
Sam Fuller |
Photographs are available from Hogarth on request.
There will be an analyst presentation today at Carluccio's Covent Garden, Garrick Street, London WC2.Nearest tubes: Charing Cross, Covent Garden or Leicester Square 9.15 am for 9.30am start.
Chairman's Statement 2008
I am delighted to report our seventh year of uninterrupted double digit growth in revenue and profit before tax.
Six new Carluccio's were opened during the financial year, including our first franchise store in Dublin, Ireland. Since the year end a further three have opened taking the total number of Carluccio's stores to 41. Our business continues to be highly cash generative, the benefit being that we can finance our opening programme out of internally generated cash flow whilst remaining debt free.
Results
Turnover for the financial year 2008 increased by an encouraging 20% to £64.1m (2007: £53.3m) despite a second year of poor summer weather.
Profit before tax increased by 14% to £5.6m (2007: £4.9m). EBITDA (earnings before interest, tax, depreciation and amortisation) rose by 17% to £7.5m (2007: £6.4m). Cash flow from operating activities before tax grew to £8.8m (2007: £8.0m). This continued strong cash generation has enabled your Board to recommend the payment of a final dividend of 1.6p per ordinary share (2007: 1.6p). The total dividend for the year will be equivalent to 2.3p per share (2007: 2.2p).
During the year we adopted IFRS (International Financial Reporting Standards) in full. IFRS do not have an impact on either the underlying performance of the business or its strong cash generation. A higher than usual effective tax rate for 2008 of 35% (2007: 29%) arose largely due to a high deferred tax charge on share based payments exacerbated by a falling share price. The higher effective tax rate restricted the growth of Diluted EPS (Earnings per Share) to 6.2p (2007: 5.9p). Removing the impact of these items from the tax charge reduces the effective tax rate to 31.5% for the year. Adjusted Diluted EPS which excludes the impact of share based payments and pre-opening expenses increased to 8.3p (2007: 7.8p).
Review of the business
2008 was a year of challenges and I am pleased with the progress that we have made in mitigating their impact and continuing to grow the business.
August 2008 was one of the wettest on record. Unusually for a restaurant group, 25% of our total seats are outside and the wetter weather meant that we were unable to utilise this additional capacity fully.
We have had to work hard to overcome the impact of some very substantial cost pressures by looking at every aspect of our business. Food cost inflation has been in double digits for most of the year and the Euro has strengthened against Sterling by approximately 15% adding further pressure to the cost of our imported retail products.
We also opened 2 new Carluccio's in the first 3 weeks of the new 2009 financial year which meant that 2008 bore the substantial majority of the pre-opening costs for these stores.
Whilst there is evidence that some of this cost pressure is abating, this still presents a significant challenge for the business in the coming months.
Store openings and development
The six openings during the year and the three openings since the year end demonstrate the growing national recognition of the Carluccio's brand and the potential to expand the business within and outside the UK.
Our first two openings of the 2009 financial year, in Leicester and Bristol, have traded substantially ahead of the Board's expectations. These openings, in the midst of some of the most negative economic newsflow for several decades, help to demonstrate the strength and resilience of our business model and underline the demand for our brand outside London and the South East.
Our new store in Earlsfield, a residential area of South West London, opened on 27 November. This puts us well on track to achieve our minimum opening target for the year of five stores. However, with the market for restaurant property under pressure our strong cash position may enable us to move forward more quickly if opportunities arise.
In 2008 we opened in two travel hubs: Heathrow Terminal Five and St Pancras International Station. These stores are trading strongly and demonstrate the flexibility of our brand and its suitability to these all day locations.
We have embarked on a measured expansion of our business overseas following the encouraging level of trading at our first franchise store in Dublin. During the year we signed our second franchise agreement with the Landmark Group, one of the largest retail groups in the Middle East and India. The agreement is to develop Carluccio's in six countries in the Gulf region. Construction of the first store in Dubai is underway and opening is anticipated in the first half of 2009.
The current restaurant market
There is no doubt that the UK has entered a period of recession with economic activity expected to slow sharply during 2009. Conditions similar to this have not been experienced by the restaurant sector for at least 15 years and along with the rest of the sector, Carluccio's cannot be totally immune. However, our business model is debt free, trades all day and offers customers the unique experience of a restaurant and retail combination at a low average spend per head. This puts us in a strong position for the medium and long term despite the challenging economic backdrop.
Since opening our first Carluccio's in 1999 we have been dedicated to putting our customers' dining and shopping experience above all other considerations. To achieve this we have changed our menu seasonally so as to be able to source the freshest and best quality ingredients that we can afford. We have scoured Italy to find outstanding suppliers for the retail products sold in our shops. We have always recruited excellent staff at all levels of our business and invested in extensive training programmes including the creation of our own cook school for our chefs. We have focussed on a measured store opening programme together with regular maintenance and improvements to enhance the customer experience. This dedication to the customer experience has enabled us to build a business generating cash returns that are above the sector average. It is not our intention to change our approach in any way despite the current pressure on consumer spending.
Management and Staff
Many years of successful profit growth and cash generation have only been achieved due to the dedication and commitment of our staff at all levels of the organisation. This has been recognised by our peers in giving us more than 20 awards both for our restaurants and our shops. Most recently at the London Restaurant Awards we were voted "Best Chain Restaurant" and Good Housekeeping accorded us the accolade of "Best Gourmet Food Retailer".
In September 2007 we launched a major campaign to work with Action Against Hunger raising £179,000 to date to fund projects in Liberia West Africa. Action Against Hunger is a humanitarian charity working with families in the world's poorest 40 countries.
Current Trading
Trading since 28 September 2008 has been satisfactory, achieved without significant discounting and in line with Board expectations. The economy faces extremely challenging times in the months ahead but I believe that our unique, debt free, all day trading business model allied with competitive pricing and relentless customer focus should stand us in good stead.
Stephen Gee
December 2008
INCOME STATEMENT
For the period ended 28 September 2008
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||||
|
Note |
£'000 |
£'000 |
|||
|
Revenue |
64,137 |
53,257 |
|||
|
Cost of sales |
(51,819) |
(42,288) |
|||
|
GROSS PROFIT |
12,318 |
10,969 |
|||
|
Administrative expenses |
(6,797) |
(6,101) |
|||
|
OPERATING PROFIT |
3 |
5,521 |
4,868 |
||
|
Finance income |
122 |
100 |
|||
|
Finance expense |
(14) |
(26) |
|||
|
PROFIT BEFORE TAXATION |
5,629 |
4,942 |
|||
|
Income tax expense |
4 |
(1,982) |
(1,432) |
||
|
PROFIT FOR THE FINANCIAL PERIOD |
3,647 |
3,510 |
|||
|
Basic earnings per share (pence) |
5 |
6.4 |
6.2 |
||
|
Diluted earnings per share (pence) |
5 |
6.2 |
5.9 |
||
STATEMENT OF CHANGES IN EQUITY
For the period ended 28 September 2008
|
Share capital |
Share premium account |
Retained earnings |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
At 25 September 2006 |
2,840 |
1,684 |
7,013 |
11,537 |
|
Profit for the financial period |
- |
- |
3,510 |
3,510 |
|
Total recognised income and expense |
||||
|
for the period |
- |
- |
3,510 |
3,510 |
|
Tax on share options taken directly to |
||||
|
reserves |
- |
- |
306 |
306 |
|
Dividends paid |
- |
- |
(1,194) |
(1,194) |
|
Issue of shares |
9 |
29 |
- |
38 |
|
Share based payment charge credited |
||||
|
to reserves |
- |
- |
332 |
332 |
|
Total change in equity for the period |
9 |
29 |
2,954 |
2,992 |
|
At 23 September 2007 |
2,849 |
1,713 |
9,967 |
14,529 |
|
Profit for the financial period |
- |
- |
3,647 |
3,647 |
|
Total recognised income and expense |
||||
|
for the period |
3,647 |
3,647 |
||
|
Tax on share options taken directly to |
||||
|
reserves |
- |
- |
(471) |
(471) |
|
Dividends paid |
- |
- |
(1,311) |
(1,311) |
|
Issue of shares |
3 |
12 |
- |
15 |
|
Share based payment charge credited |
||||
|
to reserves |
- |
- |
349 |
349 |
|
Total change in equity for the period |
3 |
12 |
2,214 |
2,229 |
|
At 28 September 2008 |
2,852 |
1,725 |
12,181 |
16,758 |
The nature and purpose of each reserve is explained below:
Share capital - represents the net value of shares in issue.
Share premium account - the accumulated amount subscribed for share capital in excess of nominal value.
Retained earnings - the cumulative income and expenses recognised in the income statement together with cumulative income and expenses required to be taken directly to equity.
BALANCE SHEET
As at 28 September 2008
|
2008 |
2007 |
|||
|
£'000 |
£'000 |
|||
|
NON CURRENT ASSETS |
||||
|
Intangible assets |
201 |
90 |
||
|
Property, plant and equipment |
22,436 |
18,463 |
||
|
Prepaid operating lease charges |
1,319 |
1,451 |
||
|
23,956 |
20,004 |
|||
|
CURRENT ASSETS |
||||
|
Inventories |
1,831 |
1,381 |
||
|
Trade and other receivables |
447 |
448 |
||
|
Prepayments |
1,614 |
1,477 |
||
|
Prepaid operating lease charges |
106 |
87 |
||
|
Cash and cash equivalents |
3,587 |
3,145 |
||
|
7,585 |
6,538 |
|||
|
TOTAL ASSETS |
31,541 |
26,542 |
||
|
CURRENT LIABILITIES |
||||
|
Trade payables |
4,492 |
3,803 |
||
|
Other tax and social security |
2,064 |
1,535 |
||
|
Accruals and deferred income |
3,924 |
3,836 |
||
|
Corporation tax liabilities |
751 |
649 |
||
|
11,231 |
9,823 |
|||
|
NON-CURRENT LIABILITIES |
||||
|
Accruals and deferred income |
1,950 |
1,712 |
||
|
Deferred tax liabilities |
1,602 |
478 |
||
|
3,552 |
2,190 |
|||
|
TOTAL LIABILITIES |
14,783 |
12,013 |
||
|
NET ASSETS |
16,758 |
14,529 |
||
|
EQUITY |
||||
|
Share capital |
2,852 |
2,849 |
||
|
Share premium account |
1,725 |
1,713 |
||
|
Retained earnings |
12,181 |
9,967 |
||
|
TOTAL EQUITY |
16,758 |
14,529 |
CASH FLOW STATEMENT
For the period ended 28 September 2008
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||
|
£'000 |
£'000 |
||
|
Profit before taxation |
5,629 |
4,942 |
|
|
Depreciation |
1,826 |
1,378 |
|
|
Amortisation of prepaid operating lease charges |
113 |
87 |
|
|
Amortisation of intangible assets |
70 |
71 |
|
|
Share based payment charge |
349 |
332 |
|
|
Net finance income |
(108) |
(74) |
|
|
Cash flows from operating activities before changes in |
|||
|
working capital |
7,879 |
6,736 |
|
|
Increase in inventories |
(450) |
(158) |
|
|
Increase in receivables |
(138) |
(282) |
|
|
Increase in payables |
1,544 |
1,690 |
|
|
Loss on disposal of property, plant and equipment |
- |
16 |
|
|
Net cash inflow from operating activities before tax |
8,835 |
8,002 |
|
|
Corporation tax paid |
(1,225) |
(806) |
|
|
Net cash inflow from operating activities |
7,610 |
7,196 |
|
|
Cash flows from investing activities |
|||
|
Finance income |
122 |
100 |
|
|
Payments to acquire intangible assets |
(181) |
(88) |
|
|
Payments to acquire property, plant and equipment |
(5,803) |
(5,523) |
|
|
Proceeds from sale of property, plant and equipment |
4 |
- |
|
|
Net cash outflow from investing activities |
(5,858) |
(5,511) |
|
|
Cash flows from financing activities |
|||
|
Finance cost |
(14) |
(26) |
|
|
Proceeds from issue of share capital |
15 |
38 |
|
|
Equity dividends paid |
(1,311) |
(1,194) |
|
|
Net cash outflow from financing activities |
(1,310) |
(1,182) |
|
|
Net increase in cash and cash equivalents |
442 |
503 |
|
|
Cash and cash equivalents at start of period |
3,145 |
2,642 |
|
|
Cash and cash equivalents at end of period |
3,587 |
3,145 |
NOTES
1. General information
Carluccio's PLC is a public limited company incorporated in the United Kingdom under the Companies Act 1985 with registration number 02001576. The Company is domiciled in the United Kingdom and has its registered office at 35 Rose Street, Covent Garden, London WC2E 9EB. The Company's shares are traded on the Alternative Investment Market ("AIM") of the London Stock Exchange.
2. Statement of compliance
The financial information in the announcement does not constitute the company's statutory accounts for the period ended 28 September 2008, prepared in accordance with IFRSs as adopted by the EU, or the period ended 23 September 2007, which were prepared under UK GAAP, but is derived from those accounts. The statutory accounts for the period ended 28 September 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the Company's annual general meeting. The auditors reported on those accounts; their reports were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 1985, s 237(2) or (3).
Basis of preparation
The principal accounting policies adopted in the preparation of these preliminary results are unchanged from those disclosed in the interim announcement published on 13 May 2008.
While the financial information included in these preliminary results have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Group expects to publish full financial statements that comply with IFRSs by 31 January 2009.
This is the first time the group has prepared its preliminary announcement in accordance with Adopted IFRSs, having previously prepared its preliminary announcement in accordance with UK accounting standards. The date of transition to IFRS is 25 September 2006. Details of how the transition from UK accounting standards to Adopted IFRSs has affected the group's reported financial position, financial performance and cash flows were given in the statement of transition to IFRS published on 8 May 2008.
As part of the IFRS conversion process, though not as a requirement of IFRS, the company has changed its accounting policy on the treatment of discounts, which are now netted off against revenue, rather than included in cost of sales.
3. Operating profit
Operating profit is stated after charging:
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||
|
£'000 |
£'000 |
||
|
Operating lease rentals for land and buildings - |
|||
|
minimum contract amounts |
4,000 |
3,149 |
|
|
Operating lease rentals for land and buildings - |
|||
|
turnover based amounts |
1,327 |
1,179 |
|
|
Share based payment charge |
349 |
332 |
|
|
Amortisation of intangible assets |
70 |
71 |
|
|
Depreciation of property, plant and equipment |
1,826 |
1,378 |
|
|
Amortisation of prepaid operating lease charges |
113 |
87 |
|
|
Loss / (gain) on foreign exchange |
58 |
(40) |
|
|
Loss on the sale of property, plant and equipment |
- |
16 |
|
|
Pre-opening expenses (including pre-opening rent) |
1,159 |
1,204 |
4. Income tax expense
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||
|
£'000 |
£'000 |
||
|
UK Corporation tax |
|||
|
Current tax on profits for the period |
1,394 |
1,333 |
|
|
Adjustment in respect of prior years |
(65) |
(56) |
|
|
Total current tax |
1,329 |
1,277 |
|
|
Deferred tax |
|||
|
Deferred tax on profits for the year |
653 |
155 |
|
|
Total deferred tax |
653 |
155 |
|
|
Total expense for the period in the income |
|||
|
statement |
1,982 |
1,432 |
|
The tax expense for the period is higher than the standard rate of corporation tax in the UK. The differences are explained below:
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||
|
£'000 |
£'000 |
||
|
Profit before taxation |
5,629 |
4,942 |
|
|
Profit on ordinary activities multiplied |
|||
|
by effective rate of corporation tax in the UK |
|||
|
of 29% (2007: 30%) |
1,632 |
1,483 |
|
|
Adjustments for the effect of: |
|||
|
Expenses not deductible for tax purposes |
299 |
211 |
|
|
Adjustment to prior year tax charge |
(65) |
(56) |
|
|
Effect of deferred tax on share based payments |
122 |
(157) |
|
|
Other adjustments |
(6) |
(49) |
|
|
Total expense for the period in the income |
|||
|
statement |
1,982 |
1,432 |
5. Earnings per share
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||
|
Numerator |
£'000 |
£'000 |
|
|
Profit for the financial period (basic earnings |
|||
|
per share) |
3,647 |
3,510 |
|
|
Share based payments net of tax |
462 |
250 |
|
|
Pre-opening expenses net of tax |
823 |
843 |
|
|
Adjusted profit for the financial period (adjusted |
|||
|
earnings per share) |
4,932 |
4,603 |
In calculating adjusted earnings per share, profit for the financial period has been adjusted for two items to enable a clearer view of underlying Company performance:
IFRS 2 "Share based payment transactions" requires that entities calculate the cost of issuing employee options. This is an exercise resulting in an accounting adjustment only. It is neither a cash expense nor a liability that will result in the outflow of cash in the future and is therefore added back to provide a clearer picture of underlying Company performance. Similarly, the deferred tax implications of IFRS 2 are adjusted for.
Pre-opening expenses are incurred in the creation and marketing of new caffé and food shops prior to opening to the public and the commencement of revenue generating activities and as such are unique to each store. These are therefore added back to provide a clearer picture of underlying Company performance.
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||
|
Number |
Number |
||
|
Denominator |
('000) |
('000) |
|
|
Weighted average number of ordinary shares |
|||
|
(basic earnings per share) |
57,005 |
56,924 |
|
|
Impact of dilutive share options |
2,190 |
2,271 |
|
|
Diluted number of ordinary shares (diluted |
|||
|
earnings per share) |
59,195 |
59,195 |
The weighted average number of ordinary shares is adjusted to take into account the dilutive impact of share option awards made to employees.
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||
|
Pence |
Pence |
||
|
Basic Earnings per Share |
6.4 |
6.2 |
|
|
Diluted Earnings per Share |
6.2 |
5.9 |
|
|
Adjusted Basic Earnings per Share |
8.7 |
8.1 |
|
|
Adjusted Diluted Earnings per Share |
8.3 |
7.8 |
6. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)
|
53 weeks ended 28 September 2008 |
52 weeks ended 23 September 2007 |
||
|
£'000 |
£'000 |
||
|
Operating Profit |
5,521 |
4,868 |
|
|
Depreciation and amortisation |
2,009 |
1,536 |
|
|
EBITDA |
7,530 |
6,404 |
7. Dividend
The Directors are recommending the payment of a final dividend of 1.6p per Ordinary 5p share (2007: 1.6p), subject to obtaining shareholder approval at the forthcoming Annual General Meeting (AGM) to be held on 6 February 2009. The dividend will be paid on 20 February 2009 to all shareholders on the register as at 9 January 2009. The amount of the final dividend is £913,000 (2007: £912,000). An interim dividend of £399,000 (2007: £342,000) or 0.7p per Ordinary 5p share (2006: 0.6p) was paid during the year. Therefore the total dividend for the year is 2.3p per Ordinary 5p share (2007: 2.2p), equivalent to £1,312,000 (2007: £1,254,000).
8. Annual Report and Accounts
The annual report and accounts for the 53 weeks ended 28 September 2008 will be posted to shareholders in due course and will also be available from the Company Secretary at the Company's registered office: Carluccio's PLC, 35 Rose Street, London, WC2E 9EB.
Related Shares:
Carluccios