| Tue 6 May 2008, 7:00 | | TAS - Taste Holdings Limited - Audited Condensed F |
|
TAS
TAS
TAS - Taste Holdings Limited - Audited Condensed Financial Results for the
year ended 29 February 2008
Taste Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/002239/06)
(JSE code: TAS ISIN: ZAE000081162)
("Taste" or "the company" or "the group")
Highlights
Revenue up 15% to R33.8 million
Headline earnings up 28% to R10 million
Headline earnings per share up 21% to 8.0 cents
Cash earnings per share up 21% to 8.3 cents
Tangible net asset value per share up 41% to 22.7 cents
System-wide sales increased 21% to R373 million
AUDITED CONDENSED FINANCIAL RESULTS
FOR THE YEAR ENDED 29 FEBRUARY 2008
CONDENSED GROUP INCOME STATEMENTS
Audited Audited
29 February 28 February
2008 2007
R`000 R`000
Revenue 33 793 29 507
Gross profit 32 327 28 105
Other income 58 927
Operating costs (20 266) (18 152)
Earnings before interest, taxation, 12 119 10 880
depreciation and amortisation ("EBITDA")
Depreciation (404) (231)
Profit before interest and taxation 11 715 10 649
Net interest received 2 421 1 146
Profit before taxation 14 136 11 795
Taxation (4 166) (3 381)
Profit after taxation 9 970 8 414
Minority interests 31 3
Earnings attributable to ordinary 10 001 8 417
shareholders
Reconciliation of headline earnings:
Earnings attributable to ordinary 10 001 8 417
shareholders
Adjusted for:
Profit on sale of property, plant and (28) (633)
equipment
Headline earnings attributable to 9 973 7 784
ordinary shareholders
Weighted average shares in issue (`000) 125 677 117 260
Shares in issue at year-end (`000) 126 720 125 000
Earnings per share (cents) 8.0 7.2
Diluted earnings per share (cents) 8.0 6.7
Headline earnings per share (cents) 8.0 6.6
Diluted headline earnings per share 7.9 6.2
(cents)
CONDENSED GROUP BALANCE SHEETS
Audited Audited
29 February 28 February
2008 2007
R`000 R`000
ASSETS
Non-current assets 19 229 16 350
Property, plant and equipment 1 028 296
Intangible assets 16 122 14 760
Deferred lease charges 1 627 315
Deferred taxation 452 516
Loans receivable - 463
Current assets 44 357 32 693
Inventories 67 -
Trade and other receivables 15 242 5 174
Shareholder`s loan 89 89
Loans receivable 999 198
Bank balances 27 960 27 232
Total assets 63 586 49 043
EQUITY AND LIABILITIES
Capital and reserves 44 836 34 866
Issued capital 1 1
Distributable reserves 19 758 9 757
Share premium 25 077 25 077
Minority interest in subsidiaries - 31
Non-current liabilities
Borrowings and other payables 276 895
Current liabilities 18 474 13 282
Taxation 1 141 3 047
Trade and other payables 16 738 7 855
Current portion of borrowings 595 2 380
Total equity and liabilities 63 586 49 043
Shares in issue (`000) 126 720 125 000
Net asset value per share (cents) 35.4 27.9
Net tangible asset value per share 22.7 16.1
(cents)
CONDENSED GROUP STATEMENTS OF CHANGES IN EQUITY
Share Share Total Retain Total Minorit Total
capital premium share ed R`000 y equity
R`000 R`000 capital income interes R`000
R`000 R`000 ts
R`000
Balance 1 1 - 1 1 340 1 341 34 1 375
March 2006
Changes in - 25 077 25 077 - 25 077 - 25 077
equity: Share
premium
Profit for - - - 8 417 8 417 (3) 8 414
year
Balance 1 1 25 077 25 078 9 757 34 835 31 34 866
March 2007
Changes in
equity: Share
premium
Profit for 10 001 10 001 (31) 9 970
year
Balance 29 1 25 077 25 078 19 758 44 836 - 44 836
February 2008
CONDENSED GROUP CASH FLOW STATEMENTS
Audited Audited
29 February 28 February
2008 2007
R`000 R`000
Cash flow from operating activities 7 252 7 554
Cash generated by operating activities 10 839 7 310
Net interest received 2 421 1 146
Taxation paid (6 008) (902)
Cash flows from investing activities (4 120) 929
Property, plant and equipment acquired (1 162) (151)
Proceeds on disposals of property, 54 1 815
plant and equipment
Loans advanced (338) (420)
Deferred lease charges (1 312) (315)
Intangible assets acquired (1 362) -
Cash flows from financing activities (2 404) 12 452
Share premium - 25 077
Loans repaid (2 404) (12 625)
Change in cash and cash equivalents 728 20 935
Cash and cash equivalents at beginning 27 232 6 297
of year
Cash and cash equivalents at end of 27 960 27 232
year
OVERVIEW
The directors of Taste have pleasure in presenting the audited year-end
results for the 12 months ended 29 February 2008 ("the 2008 year"). Taste
is a South African-based management group that is invested in a portfolio
of mostly franchised, category specialist and formula-driven, quick-service
restaurant and retail brands, currently through its Maxi`s and Scooters Pizza
brands.
The board is pleased to announce that revenue for the 2008 year increased
15%, while headline earnings increased 28% to 10.0 million. Headline
earnings per share increased 21% to 8.0 cents per share. In line with
expectations, EBITDA margin improved 16% from 31 August 2007, to 36% for
the 2008 year.
Despite generally challenging trading conditions, particularly in the second
half of the year, headline earnings for the second half of the year were 38%
higher than for the first half of the year, due to the better-than-expected
performance of Maxi`s, and opening more stores in the latter half of the year
than in the first half. System-wide sales for the group increased 21% for the
2008 year, to R373 million; while new stores increased 9.5% for the 2008 year,
bringing the total number of outlets of Taste to 161 at year end.
The group`s brands have large marketing funds relative to competitors in their
sectors, which, combined with their strong value propositions, position them
favorably with consumers in the current economic climate.
TASTE`S BRANDS
System-wide sales for the group increased 21% for the 2008 year. This
was driven by the addition of new stores and as well as like-on-like
sales increases during the year. This increase in sales has resulted in an
increase in the marketing funds of both brands, positioning the brands
favourably relative to their competitors.
Taste`s management of the supply chain on behalf of its franchisees and its
ability to source from various suppliers, positions it well to limit the
inflationary increases of input costs to franchisees. This factor will
continue to be a key advantage in ensuring that the brands maintain their
strong value propositions relative to competitors within the broader food
segment.
Scooters Pizza continued to grow its national footprint ending the year
with 115 outlets. The brand`s focused and memorable advertising was
recognised when it won the prestigious Franchise Association of Southern
Africa`s "Brand Builder of the Year" award in October 2007 - an award it
has won twice previously. The introduction of a nominal delivery charge in
December 2007 has ensured that the store-level economics for franchisees
remain sustainable in the current economic environment of rising fuel and
food prices. Scooters Pizza continues to be the only national chain with
an "if it`s late, it`s free" delivery promise and remains committed to being
at the forefront of delivery
and product innovation. Scooters Pizza introduced a store format with
lower set up costs in the second half of the 2008 year, improving franchisees
return on investment as well as reducing the amount of borrowings for new
franchisees.Maxi`s underwent an extensive revamp during 2006, culminating
in the opening of the new "Life" image store in April 2007, in Cape Town.
All subsequent stores have opened in this image and have performed above
expectations, as have existing stores revamped into this imagery. Christo
Calitz continues to drive the brand to new heights, reflected in the positive
like-on-like sales growth, particularly in the four months to March 2008.
Having been through a year of consolidation, the brand launched on main
stream media with its first television campaign in two years. On 1 March
2008, the brand acquired the exclusive right to convert all existing BJ`s
sites located in Caltex forecourts on the highways, to Maxi`s sites.
This agreement opened up a potential network of 13 outlets which are
located in high profile sites, one of which is The Bridge, located on
the N1 highway between Johannesburg and Pretoria.
FINANCIAL RESULTS
For the 2008 year, revenues increased 15% to R33.8 million (2007: R29.5
million). EBITDA margin improved from 31% for the six months ended August
2007, to 36% (2007: 37%) for the year ended 29 February 2008. This was due
to the opening of more new stores in the second half of the year, compared
to the first half of the year, as well as better cost containment during the
second half of the year. Headline earnings for the second half of the year
were 38% higher than for the first half of the year, while expenses for the
comparable periods were 6% less. This was due to expenses being relatively
higher in the first half of the year as a result of the group`s policy of
investing in human resources ahead of anticipated growth.
Headline earnings increased 28% from the previous period to R10.0 million
(2006: R7.8 million), and attributable earnings increased 19% from the
previous period to R10.0 million (2007: R8.4 million). Headline earnings
per share increased 21% to 8 cents (2007: 6.6 cents).
The nature of the company`s business model is such that trade and other
payables, which include advertising and new store development creditors,
may fluctuate significantly in the short-to-medium term, depending on the
number and timing of new stores opened and the company`s monthly commitments
to advertising spend. The group continued to generate strong cash flows
from core operations, although these were impacted by higher taxation payments
of R6 million during the course of the 2008 year (2007: R0.9 million). The
group also utilised R3.4 million to acquire or convert strategic sites to
Maxi`s.
BASIS OF PREPARATION OF THE AUDITED RESULTS
Statement of compliance
The condensed financial statements comprise a consolidated balance sheet
at 29 February 2008, a consolidated income statement, consolidated statement
of changes in equity and summarised consolidated cash flow statement for
the year ended 29 February 2008. The condensed financial statements have
been prepared in accordance with the recognition and measurement criteria
of International Financial Reporting Standards ("IFRS") and the presentation
and disclosure requirements of IAS 34, Interim Financial Reporting, JSE
Listings Requirements and the South African Companies Act.
The basis of preparation is consistent with the prior comparative year.
Basis of measurement
The condensed financial statements have been prepared on the historical cost
basis except for certain financial instruments measured at fair value.
AUDITORS` REPORT
BDO Spencer Steward (Jhb) Inc`s. unmodified auditors` report on the
condensed financial statements contained in this report is available
for inspection at the company`s registered office.
PROSPECTS
Despite the challenging trading conditions created by lower consumer
spending due to higher interest rates and high input cost inflation, Taste`s
brands are relatively well positioned to continue to offer consumers value
and to see the cycle through. Not owning its manufacturing has proved
beneficial in this climate, as Taste is able to source from various
suppliers, thereby limiting its input costs relative to competitors, and
remaining able to maintain the brands` strong value propositions.
Both of Taste`s brands have the highest number of prepaid franchise fees
for new stores in the last 12 months` history, which is promising in
respect of new store openings for the coming year. Maxi`s is experiencing
customers buying down from traditional high-service restaurants into its
offering, which combined with the increased marketing fund and presence
on television, seems to be providing resilience in the current economic
climate. The addition of the BJ`s stores to be converted during the year,
as well as further sites within the Caltex sites on highways, will see
the Maxi`s brand making significant gains in system size by the end of the
year. Consumers will continue to be time starved and will continue to seek
value-for-money meal solutions that are convenient. Both Scooters Pizza and
Maxi`s have consumer propositions that fulfill these needs.
SUBSEQUENT EVENTS
Shareholders are referred to the announcement dated 8 April 2008 in which
they were advised that Taste has, subject to certain conditions precedent,
acquired NWJ Holdings (Pty) Limited ("NWJ"), a company founded 25 years
ago. The purchase consideration will be determined with reference to
the audited results of NWJ for the year ended 30 April 2008. NWJ is a
vertically integrated, predominantly franchised chain of highly branded
outlets that retails a wide range of quality jewellery and watches at
affordable prices to the LSM 6-10 market. It does so via 70 NWJ outlets
situated in major shopping centres around South Africa.
The acquisition, once unconditional, will be earnings enhancing for the
group. This acquisition will provide a further catalyst for growth beyond
Taste`s two current brands and positions the NWJ brand favourably to grow
both organically and through acquisition in the years to come.
Shareholders are further referred to the announcement dated 27 February 2008
in which shareholders were advised that Maxi`s had concluded a transaction
with BJs Franchising and Chevron South Africa ("Caltex") to take over all
BJs sites located within Caltex service station forecourts along the national
highways within South Africa.
SHARE CAPITAL
In terms of Taste`s prospectus, dated 7 June 2006, the trustees of the
Share Incentive Trust have the power to grant 2 500 000 shares at 90 cents
per share, to certain executives and key management on the achievement of
headline earnings per share targets for the financial year ended 28 February
2007. Employees have accepted 1 720 000 ordinary shares offered by the Share
Incentive Trust.
STATEMENT ON GOING CONCERN
The condensed financial statements have been prepared on the going-concern
basis since the directors have every reason to believe that the company has
adequate resources in place to continue in operation for the foreseeable
future.
DIVIDEND POLICY
In line with the company`s growth strategy, no dividend was declared for
the year.
On behalf of the Board
C F Gonzaga
D J Crosson
Chief Executive Officer
Chief Financial Officer
6 May 2008
CORPORATE INFORMATION
Non-executive directors: R L Daly (Chairperson), K Utian, J B Currie
Executive directors: C F Gonzaga (CEO), D J Crosson (CFO), L Gonzaga,
Registration number: 2000/002239/06
Registered address: 2nd Floor, The Wanderers, The Campus, 57 Sloane Street,
Bryanston, 2191
Postal address: PO Box 7833, Sandton City, 2146
Company secretary: D J Crosson
Telephone: (011) 575 1400
Facsimile: (011) 576 1465
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Designated Adviser: Vunani Corporate Finance
These results and an overview of Taste are available at www.tasteholdings.co.za
Date: 06/05/2008 07:00:03 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
