Prince Catering and Management (Overseas) Limited

(the “Company” or “Prince”)

 

INTERIM RESULTS FOR PERIOD ENDED 30 JUNE 2006

 

Chief Executive’s Statement

 

Highlights

 

 

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 months to 30 June 2006

Notes

6 months to

30 Jun 2006

6 months to

30 Jun 2005

Year to

31 Dec 2005

 

 

(Unaudited)

£’000

(Unaudited)

£’000

(Audited)

£’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 expenses

 

(1,518)

(1,418)

(2,793)

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)

£’000

(Unaudited)

£’000

(Audited)

£’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

reserve

 

90

(44)

287

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