Prince Catering and Management (Overseas) Limited

 

(“Prince Catering” or the “Company)

 

Preliminary Statement of Final Results

for the year ended 31 December 2006

 

Chairman’s Statement

 

Following our admission to AIM, a market operated by the London Stock Exchange, in August 2006, Prince Catering & Management (Overseas) Limited (“Prince Catering”) has continued to pursue its strategy of expansion throughout mainland China and in Hong Kong. At the year end we were operating a total of 14 restaurants in 11 Chinese cities, two of them owned by the Group and 12 operated under management contracts. The Group also managed one hotel during the year, the Xi’an Prince International Hotel, as well as the Xi’an Prince Health Club, and we continue, during 2007, to work towards further restaurant openings.

 

It is disappointing to report that revenue for the year fell 12% to £6.4million despite the opening of a  new restaurant during the year in Xi’an. We believe the decline in sales was due in part to the fact that we did not open as many restaurants in 2006 as we had in 2005. Our management contracts carry initial signing fees of up to RMB 1.5 million (£99,000 approx.) which during 2005, significantly enhanced our revenues. The same level of new openings was not matched in 2006. As anticipated in the restaurant business, we also faced pressure from competitors and additionally felt the expiration of tax concessions at our Xi’an restaurant with taxes imposed at a rate of 5% on turnover in addition to a 33% charge on operating profit. We also saw a decline in business spending as a result of a cutback in government expenditure. Alongside the fall in revenue, pre-tax profits also slipped to £185,000 (2005:£1,685,000), partly due to the exceptional costs of the AIM flotation (£546,000), but we remain confident that we are addressing the issues and look forward to further new openings during the course of this year.

 

As shareholders will be aware, we believe our key strengths continue to be underpinned by our strong team of experienced management and chefs, backed by a commitment to quality control across our brand as a whole, and our strong programme of recruitment and training. As part of our continued efforts to attract an increasing customer base we are continuing to work on the creation of new dishes, paying attention among other things to an increasing awareness of environmental concerns surrounding existing luxury favourites such as shark fin soup and abalone.

 

During the first half of 2007 we have opened one further restaurant under management contract, the Yulin Prince Hotpot Restaurant in Shaanxi Province. We are, of course, continuing to work on further openings. Longer term, as we advised to shareholders during our admission to AIM, we are also planning new Group-owned restaurants in Shanghai and Beijing, where we hope to position ourselves to take advantage of the positive economic impact expected from the Beijing 2008 Olympic Games and the Shanghai 2010 World Expo.

 

In summary, while 2006 has provided some challenges, particularly during our initial period as a quoted company, we believe we remain well positioned to put ourselves back on course during 2007.

 

 

Mr. Guangfan Mai

Chief Executive

29 June 2007

 

For further information please contact:

 

David Youngman, WH Ireland Limited                            +44 (0) 161 832 2174

Allan Piper, First City Financial                                         +44 (0) 20 7242 2666

 


 

 

CONSOLIDATED Income Statement

For the year ended 31 December 2006

 

 

Note

 

2006

£’000

2005

£’000

Revenue

 

 

6,410

7,296

Cost of sales

 

 

(2,398)

(2,502)

Gross profit

 

 

4,012

4,794

Other operating income

 

 

-

1

Selling and distribution expenses

 

 

(2,588)

(2,793)

Administrative expenses

 

 

(712)

(319)

Operating Profit

3

 

712

1,683

Exceptional costs of AIM listing

3

 

(546)

-

Investment income

 

 

19

2

Profit before income taxes

 

 

185

1,685

Income Taxes

9

 

(176)

(182)

Profit for the financial year

 

 

9

1,503

Attributable to Equity holders of the parent company

Minority Interest

 

 

(112)

121

1,353

150

Earnings (loss) per share

23

 

 

 

-Basic (pence)

 

 

(0.1p)

1.7p

-Fully diluted (pence)

 

 

(0.1p)

1.7p

 

 

 

All income and expenses relate to continuing and existing operations

 

 

 


CONSOLIDATED BALANCE SHEET

For the year ended 31 December 2006

Note

2006

£’000

2005

£’000

Non-current assets

 

 

 

Intangible fixed assets

11

16

    44

Tangible assets

10

1,428

1,908

Deferred tax asset

 

65

14

Total non-current assets

 

1,509

1,966

 

 

 

 

Current assets

 

 

 

Inventories

13

214

   289

Trade and other receivables

14

1,967

1,922

Cash and cash equivalents

15

841

   592

Total current assets

 

3,022

2,803

 

 

 

 

Total assets

 

4,531

4,769

 

 

 

 

Current Liabilities:

 

 

 

Trade and other payables

16

(2,209)

(1,799)

 

 

 

 

 

 

 

 

Total assets less current liabilities

 

2,322

2,970

 

 

 

 

Net assets

 

2,322

2,970

 

 

 

 

Equity

 

 

 

Share capital

18

1,756

1,846

Foreign currency translation reserve

19

13

 287

Statutory reserves

19

343

   276

Pooling Reserve

19

176

48

Warrant reserve

19

29

-

Retained Earnings

19

(713)

    (162)

Equity attributable to the equity holders of the parent company

 

1,604

2,295

Minority Interest

 

718

675

Total Equity

 

2,322

2,970

 


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2006

 

 

Share Capital

Retained Earnings

Share Premium

Pooling Reserve

Minority

interest

Statutory

Reserves

Warrants Reserve

Foreign Currency Translation

Total Equity

 

 

 

 

 

 

 

 Reserve

 

 

 

 

 

 

 

 

£’000

 

£’000

£’000

£’000

£’000

£’000

£’000

£’000

 

£’000

At 1 January 2005