RNS Number:7053J
Prince Catering & Mgmnt (Overseas)
29 September 2006
Prince Catering and Management (Overseas) Limited
(the "Company" or "Prince")
INTERIM RESULTS FOR PERIOD ENDED 30 JUNE 2006
Chief Executive's Statement
Highlights
* Successful admission to trading on AIM subsequent to the end of the period
under review;
* Continuing sound performance of Group owned restaurants;
* Overall sales and profits impacted by tax regulation change and lower
numbers of new management contracts executed in the period under review
compared with the same period in 2005; and
* Positive start to second half.
It is my pleasure to present the inaugural set of interim results on behalf of
Prince, the first China-based catering service company trading on AIM. The
directors believe that the Company's admission to AIM has raised its profile and
positioned it to build on its existing reputation and expand its market share of
the luxury Cantonese restaurant market in the People's Republic of China.
Although the results for the period have been impacted by a one-off change in
our tax position and slippage in the signing of expected contracts, we are
encouraged by a sound performance in sales from our Group owned restaurants.
Overview
At present Prince and its subsidiaries (the "Group") operate one restaurant
through a wholly owned subsidiary, one restaurant through a 51% owned subsidiary
and 11 others as managed restaurants. A further managed restaurant opened in
Xi'an in September 2006 following the end of the period under review. In
addition, the Group operates a hotel and a separate health club under management
contracts, with a further hotel expected to open in Beijing later this year.
Background
Since the first Prince restaurant was established in Xi'an in 2002 the Group has
grown rapidly and, as set out above, now manages 14 restaurants, all branded
with the Prince name. Discussions are currently under way with potential
investors for a further 3 restaurants, although at this stage the Directors do
not know how many of the potential opportunities will be realised or exactly how
many new restaurants will be opened.
Of the Group's two main operating streams, the Directors believe that the
management contract concept will become the main source of new income for the
Group and is the area where the management will focus much of their efforts. The
management contract concept has a higher profit margin and lower capital
requirements than the Group owned restaurant concept as third party investors
usually own the restaurant and are responsible for all associated costs, paying
only a set fee to the Group to operate that restaurant on its behalf. Usually,
but not always, the fee paid by the third party investor to the Group takes the
form of an initial contract fee (in the region of #100,000) and monthly
management fees, usually calculated as a percentage of restaurant turnover.
The income and fees received by the Group depend significantly on new restaurant
openings. During the period under review the Group executed fewer management
contracts for new restaurants than in the same 6 months' period of 2005. This
has affected the Group's trading performance for that 6 months' period.
Results
6 months ended 6 months ended
30/06/06 30/06/05
#'000 #'000
Turnover 3,373 3,591
Profit before tax 593 893
Turnover in the period under review decreased to #3,373,000, compared with the
same period in 2005 (2005: #3,591,000). More specifically, the turnover
generated from the two Group owned restaurants increased to #2,987,000 (2005:
#2,937,000) whilst the turnover generated from managed restaurants, for the
reasons set out above, decreased to #386,000 (2005: #654,000) . Overall, the
profit before tax for the period under review decreased to #593,000 against the
same period in 2005 (2005: #893,000 ).
In addition, profit after tax (not shown above) decreased to #481,000 (2005:
#807,000) impacted by the expiry of a tax free period for one of the owned
restaurants at the end of 2005.
Outlook
The second half of the year has started positively with the signing of a further
management contract and the opening of the Xi'an Kingfar restaurant for which
the management contract was executed earlier this year. Following various
conversations with potential investors in the management contract concept, the
Directors are confident for the future.
Mr Guangfan Mai
For more information please contact:
David Youngman, WH Ireland Limited +44 161 832 2174
CONSOLIDATED INCOME STATEMENT
Interim results for the six Notes 6 months to 6 months to Year to
months to 30 June 2006 30 Jun 2006 30 Jun 2005 31 Dec 2005
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Revenue 3,373 3,591 7,296
Cost of sales (1,211) (1,235) (2,502)
_______ _______ _______
Gross profit 2,162 2,356 4,794
Other operating income 0 0 1
Selling and distribution (1,518) (1,418) (2,793)
expenses
Administrative expenses (51) (45) (319)
_______ _______ _______
Profit from operations 593 893 1,683
Investment income 0 0 2
_______ _______ _______
Profit before income tax 593 893 1,685
Income tax (112) (86) (182)
_______ _______ _______
Net profit for the period 481 807 1,503
_______ _______ _______
Attributable to
Equity holders of the parent 408 742 1,353
Minority interest 73 65 150
_______ _______ _______
All amounts relate to continuing activities.
No meaningful Earnings per Share calculation is possible as the group structure
and AIM flotation occurred since June 2006
CONSOLIDATED BALANCE SHEET
At 30 June 2006 Notes As at 30 June 06 As at 30 Jun 05 As at 31 Dec 05
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Non-current assets
Property, plant and equipment 1,617 1,797 1,908
Intangible assets 30 52 44
_______ _______ _______
Total non-current assets 1,647 1,849 1,952
_______ _______ _______
Current assets
Deferred tax assets 4 25 14
Inventories 219 257 289
Trade and other receivables 1,743 2,460 1,922
Cash and cash equivalents 803 730 592
_______ _______ _______
Total current assets 2,769 3,472 2,817
_______ _______ _______
Total assets 4,416 5,321 4,769
_______ _______ _______
Equity and liabilities
Combined capital and reserves
Paid-up capital 1,912 1,877 1,894
Other reserves 305 215 276
Foreign currency translation 90 (44) 287
reserve
Retained earnings 77 866 (162)
_______ _______ _______
2,384 2,914 2,295
Minority interest 580 543 675
_______ _______ _______
Total Equity 2,964 3,457 2,970
_______ _______ _______
Current liabilities
Trade and other payables 1,315 1,748 1,641
Dividends payable 48 0 124
Income tax payable 71 111 29
Deferred tax liability 18 5 5
_______ _______ _______
Total liabilities 1,452 1,864 1,799
_______ _______ _______
Total equity and liabilities 4,416 5,321 4,769
_______ _______ _______
COMBINED STATEMENTS OF CHANGES IN EQUITY
Foreign
currency
Paid up Other translation Retained Minority Total
capital reserves reserve earnings Total interest equity
#000 #000 #000 #000 #000 #000 #000
Year to 31.12.05
At 31.12.04 1,894 93 (106) 184 2,065 459 2,524
Transfer to reserves 183 (183) - -
Profit for the period 1,353 1,353 150 1,503
Dividends (1,516) (1,516) (1,516)
Foreign currency
translation 393 393 393
Other movements - 66 66
_______ _______ _______ _______ _______ _______ _______
At 31.12.05 1,894 276 287 (162) 2,295 675 2,970
_______ _______ _______ _______ _______ _______ _______
Six months to
30.06.05
At 31.12.04 1,894 93 (106) 184 2,065 459 2,524
Transfer to reserves 119 (119) - -
Profit for the period 742 742 65 807
Dividends - -
Foreign currency
translation 62 62 62
Other movements (17) 3 59 45 19 64
_______ _______ _______ _______ _______ _______ _______
At 30.06.05 1,877 215 (44) 866 2,914 543 3,457
_______ _______ _______ _______ _______ _______ _______
COMBINED STATEMENTS OF CHANGES IN EQUITY (CONT'D)
Foreign
currency
Six months to Paid up Other translation Retained Minority Total
30.06.06 capital reserves reserve earnings Total interest equity
At 31.12.05 1,894 276 287 (162) 2,295 675 2,970
Transfer to reserves 37 (37) - -
Profit for the period 408 408 73 481
Dividends (132) (132) (132) (264)
Foreign currency
translation (197) (197) (197)
Other movements 18 (8) 10 (36) (26)
_______ _______ _______ _______ _______ _______ _______
At 30.06.06 1,912 305 90 77 2,384 580 2,964
_______ _______ _______ _______ _______ _______ _______
CONSOLIDATED CASH FLOW STATEMENTS
Notes 6 months to 6 months to Year to
30 Jun 2006 30 Jun 2005 31 Dec 2005
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Cash flows from operating activities See note 667 317 251
_______ _______ _______
Cash flows from investing activities
Purchase of franchise - - 39
Purchase of property, plant and equipment 22 4 147
Interest received - - 2
_______ _______ _______
Cash flows used in investing activities (22) 4 (184)
_______ _______ _______
Cash flows from financing activities
Dividend paid (322) - -
_______ _______ _______
Cash flows from financing activities (322) - -
_______ _______ _______
Net increase in cash and cash equivalents 323 321 67
Cash and cash equivalents at beginning of 592 403 403
period
Foreign exchange differences (112) 6 122
_______ _______ _______
Cash and cash equivalents at end of 803 730 592
period
_______ _______ _______
NOTE TO THE CASH FLOW STATEMENT
For the six months ended 30 June 2006
Cash flows from operating activities
6 months to 30 6 months to 30 Year to
Jun 06 Jun 05 31 Dec 05
#'000 #'000 #'000
Net profit after minority interest 408 742 1,353
Adjustments for:
Amortisation of intangible assets 14 17 24
Depreciation of property, plant and equipment 173 154 323
Losses on disposal of property, plant and equipment - - 5
Interest income 11 11 (2)
Income tax expenses 112 86 182
Minority interests 73 65 150
______ ______ ______
Operating profit before working capital changes: 791 1,075 2,035
(Increase)/decrease in:
Inventories 70 (23) (68)
Trade and other receivables 179 (811) (1,840)
Increase/(decrease) in:
Trade and other payables (326) 162 273
______ ______ ______
Cash generated from (used in) operations 714 403 400
Income tax paid (47) (86) (149)
Cash flows from operating activities 667 317 251
NOTES TO THE INTERIM REPORT
1 Responsibility
The directors of Prince Catering & Management (Overseas) Limited are
responsible for the financial information set out in this interim report.
2 Basis of preparation and aggregation
The financial information is based on the combined financial information
of Xi'an Prince Restaurant Co. Ltd, Hong Kong Prince Restaurant Co. Ltd, and
Shenzhen Prince Beverage and Catering Management Co. Ltd (the 'Combined Group')
for the six month period ended 30 June 2006. The aforementioned undertakings of
the Combined Group have been under common management and control throughout the
period, irrespective of actual shareholdings, and therefore financial
information in respect of these subsidiary undertakings has been prepared as if
they had been part of the Combined Group throughout the period. Results and net
assets of the relevant entities are aggregated (with eliminations for
inter-company transactions and balances).
The combined Group does not comprise a "group" as defined by
International Financial Reporting Standards at 30 June 2006. Since that date,
the ownership has been reorganised to form a group and the parent company was
admitted to the AIM on 31 August 2006.
The directors of Prince Catering & Management (Overseas) Limited have
elected to prepare pro-forma consolidated financial statements for the Combined
Group which comply, as far as reasonably practicable, with International
Financial Reporting Standards ("IFRSs") as adopted by the European Union.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses for the period. Although the
estimates are based on management's best knowledge of current events, actual
results ultimately may differ from these estimates.
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