Half Yearly Report

17 May 2010

Interim Results for the 26 weeks ended 28 March 2010

Carluccio's, the leading UK group of authentic Italian restaurants with integrated food shops, is pleased to announce its interim results for the 26 weeks ended 28March 2010.

* Earnings before Interest Tax Depreciation and Amortisation (EBITDA). See note 6 to the financial statements for details.

Highlights

·; Three new Carluccio's opened in the period. A fourth store in Milton Keynes is due to open in July

·; The Company now trades from 45 stores in the UK with a further 4 stores under franchise

·; Site pipeline showing real progress with 7 sites secured and 5 scheduled to open by the end of the calendar year

·; Successful resolution of Dublin franchise rent negotiations

·; 2 further stores under franchise opened in Dubai in March and April, building on the success of the initial opening. A fourth site in Qatar is scheduled to open towards the end of 2010

·; Industry leading CROCI (Cash Return on Cash Invested) of 51%

·; Strong cash generation with a £1m increase in cash reserves to £3.8m

·; Interim dividend increased by 14% over prior year to 0.8p

Stephen Gee, Chairman, said:

"I am pleased to report good progress in the period. Profit before tax grew by 8% and our cash balance grew by £1m despite having to deal with the twin challenges of new National Minimum Wage legislation and a return to a higher VAT rate. Our flexible, all day trading, business model with a low average spend in the caffe of £13 has proved extremely resilient. We serve in excess of 140,000 customers every week in our restaurants and food shops all of whom come to enjoy our excellent quality, authentic Italian food. This level of customer loyalty combined with our positive cash position augurs well for the future and together with the inherent strength of our business model, should ensure that we report further progress in the second half of the year."

For further information, please contact:

Photographs are available from Hogarth on request.

There will be an analyst presentation today at Carluccio's Garrick Street, London WC2E 9EB.

Nearest tube stations: Leicester Square, Covent Garden, Charing Cross. 9.15 am for 9.30 am start.

Chairman's interim statement

I am pleased to report a successful first half of the year. Turnover for the 26 weeks increased to £37.1m (2009: £34.5m). EBITDA (Earnings before interest, tax, depreciation and amortisation) increased to £4.1m (2009; £3.7m) and profit before tax increased by 8% to £2.7m (2009: £2.5m). Earnings per share grew by 10% to 3.2 pence, ahead of profit growth due to a decline in the tax charge from 34% to a more usual 32% of profit before tax.

These increases have been achieved despite having to overcome the twin challenges of the new National Minimum Wage legislation and the reintroduction of a higher VAT rate of 17.5%. The strong growth in profit outlined above and a £1m increase in our cash balance will enable the payment of an increased interim dividend of 0.8 pence per share (2009: 0.7 pence). The interim dividend will be paid on 18 June 2010 to shareholders on the register as at 28 May 2010. 

We continue to achieve an industry leading average cash return on cash invested (CROCI) of 51% which resulted in our cash balance growing by 37% to £3.8m. As well as the payment of an increased dividend, this strong cash generation will ensure that we continue to finance our now enhanced opening programme out of internally generated cash flow. 

We have already opened three new stores this financial year in Wimbledon, Exeter and Cardiff and are due to open a fourth store in Milton Keynes in July. All of the newly opened stores are trading encouragingly ahead of Board expectations and our total estate now numbers 45. A further 7 new stores are in the pipeline and 5 of these are expected to open before the calendar year end.

Following the favourable response from our customers we have continued our store refurbishment programme to reflect our new updated design style. We have now completed five stores all of which have shown an uplift in trade and we will continue refurbishing stores throughout the next year.

Our franchisee in the Middle East, the Landmark Group, has opened two more stores in Dubai during the period bringing the total number of sites to three. A fourth site, in Qatar, is scheduled to open in late 2010 and Landmark is actively searching for more sites. I am pleased to report that the dispute between our Irish franchisee and their landlord in Dublin has been amicably resolved and the rent has been reduced to a level more in line with the current Irish property values. This resolution will now allow our franchisee to focus on the further development of the Carluccio's brand in Ireland.

Trading since the year end has been positive and is in line with the Board's expectations. The trading environment, however, is likely to remain difficult to predict and uncertain in the near term. The impact of a Coalition Government following the outcome of the General Election and the need to take dramatic action to reduce the budget deficit will only add to this climate of uncertainty. Our flexible, all day trading, business model with a low average spend in the caffe of £13 has proved extremely resilient. We serve in excess of 140,000 customers every week in our restaurants and food shops all of whom come to enjoy our excellent quality, authentic Italian food. This level of customer loyalty combined with our positive cash position augurs well for the future and together with the inherent strength of our business model, should ensure that we report further progress in the second half of the year.

Statement of comprehensive income

For the 26 weeks ended 28 March 2010

Balance sheet as at 28 March 2010

Statement of changes in equity as at 28 March 2010

Cashflow statement

For the 26 weeks ended 28 March 2010

NOTES TO THE FINANCIAL STATEMENTS

For the 26 weeks ended 28 March 2010

1. General information

Carluccio's PLC is a public limited company incorporated in the United Kingdom 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 listed on the Alternative Investment Market of the London Stock Exchange. Copies of the interim report will be sent to shareholders or can be obtained from the website at www.carluccios.com.

2. Basis of preparation

The financial statements have been prepared using International Financial Reporting Standards (IFRS) as adopted by the European Union and in accordance with International Accounting Standard 34 Interim Financial Reporting.

During the period the Company has adopted IAS 1 (amended) 'Presentation of Financial Statements'. The effect of this is presentational and has no impact on the reported profit or net assets.

Other than stated above, the same accounting policies, presentation and methods of computation have been followed in these financial statements as were applied in the preparation of the Company's financial statements for the year ended 27 September 2009.

The interim financial information contained in these statements covers the 26 weeks from 28 September 2009 to 28 March 2010, is unaudited and does not constitute statutory financial statements as defined in Section 435 of the Companies Act 2006.  The financial information for the 52 weeks ended 27 September 2009 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for 2009 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2009 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 financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except where stated otherwise.

3. Segmental information

Revenue is attributable to the principal activity of the Company which is carried out substantially in the United Kingdom.

The Company operates in one business sector (caffé and foodshops) and in substantially one geographical market (the United Kingdom), therefore no segmental information is presented.

4. Dividend

The directors are proposing the payment of an interim dividend of 0.8 pence per ordinary share (2009: 0.7 pence). The total dividend payable will be £456,000 (2009: £399,000) and will be paid to all shareholders on 18 June 2010 provided that they appear on the register as at 28 May 2010. The final dividend of 1.6 pence per ordinary share (2009:1.6 pence) for the 52 weeks ended 27 September 2009 was paid on 19 February 2010. The total amount of the dividend payment was £913,000 (2009:£913,000).

5. Earnings per ordinary share (EPS)

In calculating adjusted earnings per share, profit for the period has been adjusted for several items to enable a clearer view of underlying Company performance:

·; The provisions for impairment and onerous leases do not relate to trading activities of the Company and are non-cash in nature.

·; 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 marketing of new caffé and foodshops 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.

6. Adjusted Earnings Before Interest Tax and Depreciation (EBITDA)

7. Share capital

Movements in share capital