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: 020 7637 1166

Jonny Plant, Chief Executive

Cenkos Securities                                                             Tel: 020 7397 8927

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

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

Consolidated balance sheet at 28 December 2014

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

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

4      Finance expense

5      Employees

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

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

7      Earnings per share

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

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

11   Prepaid operating leases

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

12   Inventories

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

14   Trade and other payables

15   Provisions

16   Deferred tax

17   Borrowings

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

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.

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

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)