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 |