Patisserie Holdings PLC (‘the Group’) Preliminary results for the 12 months ended 30 September 2014

Patisserie Holdings PLC, the leading UK branded café and casual dining group, today reports

its maiden preliminary results for the 12 months ended 30 September 2014

Financial summary

12 months ended

12 months ended

30 September 2014

30 September 2013

Change

£m £m %

Revenue 76.6 60.1 27.5%

Adjusted EBITDA* 15.3 12.0 27.2%

Adjusted pre-tax profit* 11.3 8.2 37.0%

Statutory pre-tax profit 10.4 8.2 26.8%

Basic earnings per share 10.41p 8.85p 17.7%

Adjusted basic earnings per share* 11.41p 8.85p 29.0%

Diluted earnings per share 10.12p 8.43p 20.0%

Adjusted diluted earnings per share* 11.10p 8.43p 31.7%

*excluding £0.9m of costs associated with admission to AIM and acquisition of Philpotts.

Financial highlights

Continued strong growth in revenue (£76.6m), up 27.5%, and adjusted EBITDA (£15.3m), up

27.2%

Significant growth in adjusted pre-tax profit (£11.3m), up 37.0%

Strong balance sheet maintained with all long-term debt repaid during the year

Operations remain strongly cash generative. Underlying operating cash inflows of £11.7m

(pre-exceptional items), up 11.4%

100% increase in online sales to £2.6m (2013: £1.3m)

Average store payback period of 23 months ahead of 24 month target

Operational highlights

19 new stores opened in the year (2013:19)

Acquisition of Philpotts (Holdings) Limited in February 2014 which added 23 stores to the

Group

148 stores at end of year (2013:108) made up of new openings and Philpott’s acquisition

Continued Group expansion - First motorway service station and retail park stores opened;

and our first store in Wales

20 new stores targeted for 2015

Current Trading

Trading in the first six weeks of the year has been good and the business continues to perform in line

with management’s expectations. Since the year end we have already opened 3 new stores and the

strong pipeline of new sites provides confidence that we can achieve the planned number of stores for

the year, all funded from operating cash flows.

Luke Johnson, Executive Chairman, said

“I am pleased to report another excellent performance for Patisserie Holdings in what has been a

pivotal year in the development of the Group. The management team has delivered the eighth

consecutive year of organic growth, acquired the Philpotts business and in May successfully listed the

Company on AIM. Each of our five differentiated brands continues to grow and, with the Group’s

strong cash generation funding our future organic growth, we are looking forward to another exciting

year in 2015.”

Enquiries

Patisserie Holdings PLC +44 (0)121 777 7000 Luke Johnson, Executive Chairman Paul May, Chief Executive Officer Chris Marsh, Finance Director Nomad and Broker Canaccord Genuity Limited +44 (0)20 7523 8000 Bruce Garrow Peter Stewart Joe Weaving Financial Public Relations Maitland +44 (0) 20 7379 5151 Brian Hudspith James Devas

Chief Executive’s Review

Results

I am pleased to report our maiden results as a public company for the 12 months ended 30

September 2014, continuing our track record of growth. The Group delivered an increase in revenue

of £16.5m or 27.5% to £76.6m (2013: £60.1m). Adjusted EBITDA, adjusted for one-off costs of £0.6m

relating to the admission to AIM and £0.3m for the acquisition of Philpotts, was £15.3m, an increase

of £3.3m or 27.2% (2013: £12.0m). Adjusted pre-tax profit was £11.3m, an increase of £3.1m or 37%

(2013: £8.2m). Statutory pre-tax profit, after the above-mentioned one-off costs, was £10.4m which

was £2.2m or 26.8% higher than the previous year (£2013: £8.2m).

Adjusted basic earnings per share of 11.41 pence per share was 29.0% up on last year (2013: 8.85

pence per share) and adjusted diluted earnings per share was 11.10 pence per share which was

31.7% higher than last year (2013: 8.43 pence per share).

All of our brands performed well in the year, and we are encouraged by the excellent growth in online

sales which increased by 100% compared to the prior year. Revenue from our main trading brand,

Patisserie Valerie (98 sites), was £51.1m in 2014 compared to £42.4m in 2013, an increase of 20%.

Revenue from our two other trading brands which traded for the full 12 months, Druckers (22 sites)

and Baker & Spice (4 sites) grew from £16.1m in 2013 to £16.5m in 2014.

Flour Power City (1 site), our wholesale bakery acquired in May 2013 is now fully integrated into the

Group. Sales improved from £2.4m in 2013 to £2.6m in 2014. The bakery also benefits from having

additional production capacity and it is this operational gearing which has helped to control gross

profit margins in the Group.

These results are particularly pleasing in a year in which we also completed the acquisition of

Philpotts and the admission of the Group to AIM.

Acquisitions

Although our primary strategy remains one of organic growth, we acquired Philpotts (23 sites), a premium sandwich retailer, in February 2014 for a consideration of £6.3m (including £2.2m to settle debt obligations and fees of £0.3m). With our expertise, as we modify the offering and incorporate the Group’s purchasing power, we expect further synergies and gross profit efficiencies as the entity is fully integrated into the Group. With our balance sheet strength we are well positioned to take advantage of future acquisitions

opportunistically provided they meet the Group’s store payback period of 24 months

Estate Development

We opened 19 new stores in the year, just short of our target of 20 openings per year.

Leases on two stores expired in the year and these sites were closed. One of these was the only loss

making store within the entire estate, inherited as part of an earlier acquisition. This brings the

number of stores in our Group to a total of 148, all of which are profitable.

The 19 new store openings are a mixture of traditional high-street shops and shopping centre outlets,

including our first store in Wales, expanding our geographical presence. We also opened our first

motorway service station outlet in Beaconsfield. All of our new stores are delivering a positive

contribution.

Of the stores opened in FY13, all 19 stores are trading well and the majority have already paid back

the capital outlay well ahead of the 24 month target that we set. Encouragingly a number of stores

opened in FY14 have also paid back their capital outlay already.

We will continue our roll out strategy in 2015 and beyond and will look to open a further 20 stores in

the year ending 30 September 2015. Since the year end we have already opened 3 new stores and

are confident that we can achieve the planned number of stores for the year, all to be funded from

operating cash flows.

Cash flow and financing

The admission to AIM generated net cash proceeds of £33.9m for the Group which enabled us to repay all external long-term bank debt and shareholder loan notes. Cash flow from operations remains strong with £9.3m of cash inflows before exceptional items. As our

external bank debt was repaid, we accelerated the timing of our payment cycle, this has resulted in

cash being temporarily lower (£2.4m) at the balance sheet date; we expect this to realign in 2015. Our

underlying operating cash inflows are £11.7m (pre-exceptional costs) which compares to £10.5m of

cash inflows in the prior year.

We invested £7.0m for the purchase and fit out of our new stores which was self-funded from operating cash flows and incurred £6.3m on the acquisition of Philpotts. People

2014 has been a pivotal year in the life of Patisserie Holdings and our success is due to the commitment of our employees. The staff who work in our stores are the face of our Group and we place great importance on welcoming our customers into our stores. We take feedback from our customers seriously and this information is reported to the Executive team on a monthly basis. As the business continues to grow and becomes more complex we have taken the opportunity to bring new talent and experience into our business. We have strengthened a number of key positions including our Board, senior Operations, Finance and Marketing. We are already seeing the benefits of this recruitment for example our online revenues have increased from £1.3m in 2013 to £2.6m in 2014. We continue to reward our staff and in June we implemented a share options scheme for our employees. I’d like to take this opportunity to thank our teams for their hard work and dedication.

Dividends

As previously announced, the Directors continue to anticipate a maiden dividend to be paid in respect of the financial year ending 30 September 2015. Outlook With five differentiated brands we are well placed across the fragmented UK coffee shop and casual dining markets, where we believe there is significant potential for growth. Our strategy to roll-out new stores is on track and delivering returns in line with our expectations. With each of our brands continuing to grow, profitable stores across the entire estate and encouraging current trading, we are looking forward to another exciting year in 2015.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2014

12 months

ended

12 months

ended

12 months

ended

12 months

ended

30

September

30

September

30

September

30

September

2014 2014 2014 2013

£’000 £’000 £’000 £’000

Before

exceptional

items

Exceptional

items

Total Total

Continuing operations

Revenue 76,641 - 76,641 60,112

Cost of sales (17,363) - (17,363) (13,148)

Gross profit 59,278 - 59,278 46,964

Administrative expenses (47,149) (858) (48,007) (37,379)

Operating profit 12,129 (858) 11,271 9,585

Finance expense (858) - (858) (1,356)

Profit before income tax 11,271 (858) 10,413 8,229

Income tax expense (1,512) - (1,512) (1,427)

Profit after tax and total comprehensive

income for the year attributable to equity

holders

9,759

(858)

8,901

6,802

Earnings per share

Basic earnings per share (pence) 11.41 - 10.41 8.85

Diluted earnings per share (pence) 11.10 - 10.12 8.43

CONSOLIDATED BALANCE SHEET

AT 30 SEPTEMBER 2014

At 30

September

At 30

September

2014 2013

£’000 £’000

ASSETS

Non-current assets

Intangible assets 17,897 13,759

Property, plant and equipment 28,794 22,073

46,691 35,832

Current assets

Trade and other receivables 10,552 5,453

Inventories 3,927 2,684

Cash and cash equivalents 484 130

14,963 8,267

Total assets 61,654 44,099

EQUITY AND LIABILITIES

Equity

Capital and reserves attributable to the equity

holders

Ordinary share capital 1,000 1

Share premium 33,661 499

Other reserves (212) -

Retained earnings 20,407 11,506

Total equity 54,856 12,006

Non-current liabilities

Borrowings - 24,530

Deferred tax 1,746 988

1,746 25,518

Current liabilities

Trade and other payables 3,149 4,056

Borrowings 1,903 2,254

Corporation tax - 265

5,052 6,575

Total liabilities 6,798 32,093

Total equity and liabilities 61,654 44,099

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2014

Share

capital

Share

premium

Merger

reserve

Capital

redemption

reserve

Share

based

payment

reserve

Retained

earnings

Total

£'000 £'000 £'000 £'000 £'000 £'000 £'000

As at 1 October 2012 1 499 - - - 4,704 5,204

- -

Result and total comprehensive

income for the year

- - - - - 6,802 6,802

- - - - - 6,802 6,802

Transactions with owners - - - - - - -

As at 30 September 2013 1 499 - - - 11,506 12,006

Result and total comprehensive

income for the year

- - - - -

8,901

8,901

Transactions with owners

Increase in share based payments

reserve

- - - - 54 - 54

Shares issues under employee

share schemes

41 1,959 - - - - 2,000

Reorganisation of share capital 765 (499) (312) 46 - - -

Shares issued on listing on AIM 193 32,560 - - - - 32,753

Cost of issue of equity shares - (858) - - - - (858)

As at 30 September 2014 1,000 33,661 (312) 46 54 20,407 54,856

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2014

12 months

ended

30

September

12 months

ended

30

September

2014 2013

£’000 £’000

Cash flows from operating activities

Profit before income tax 10,413 8,229

Adjusted by:

Depreciation 3,195 2,459

Net finance charges in the consolidated statement of

comprehensive income

858 1,356

Impairment charge - -

Other non-cash charges 58 -

Changes in working capital:

Inventory (1,130) (721)

Trade and other receivables (2,771) (1,028)

Trade and other payables (2,197) 186

Cash generated from operations 8,426 10,481

Interest paid (858) (907)

Income tax paid (3,124) (2,395)

Net cash generated from operating activities 4,444 7,179

Cash flows from investing activities

Acquisition of subsidiary undertakings (3,869) (1,070)

Purchase of property, plant and equipment (7,032) (6,145)

Net cash used in investing activities (10,901) (7,215)

Cash flows from financing activities

Proceeds from borrowings 7,875 1,017

Net proceeds from issue of shares 33,895 -

Repayment of borrowings (35,608) (2,022)

Net cash(used in)/generated from financing activities 6,162 (1,005)

Net decrease in cash and cash equivalents (295) (1,041)

Cash and cash equivalents at the beginning of the year

(1,124)

(83)

Cash and cash equivalents at the end of the year

(1,419)

(1,124)

NOTES TO THE PRELIMINARY RESULTS

1. This announcement was approved by the Board of Directors on 25 November 2014. 1.1. The financial information set out above does not constitute the Group’s statutory financial

statements for the years ended 30 September 2014 or 2013, but is derived from those accounts. Statutory financial statements for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered in due course. The Independent Auditors' Report on the Annual Report and Financial Statements for both periods was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

1.2. For the year ended 30 September 2014 the consolidated financial statements of the Group

have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), and the Companies Act 2006 applicable to companies reporting under IFRS.

1.3. This financial information has been prepared in accordance with the accounting policies stated

in the Group’s financial statements for the year ended 30 September 2014. The financial statements have been prepared on the historical cost basis. There are a number of new accounting standards, amendments to existing standards and interpretations which are mandatory for the year ended 30 September 2014. No changes arising from new or revised accounting standards have had a material impact on the consolidated financial statements of the Group.

2. Earnings per Share

Earnings

£’000

2014

Weighted

average

number of

share

Earnings

per share

(pence)

Earnings

£’000

2013

Weighted

average

number of

share

Earnings

per share

(pence)

Basic earnings per share 8,901 85,505,967 10.41 6,802 76,881,366 8.85

Effect of dilutive share

options

-

2,412,879

-

-

3,851,995

-

Diluted earnings per

share

8,901

87,918,847

10.12

6,802

80,773,361

8.43

3. Segmental Analysis

Management has determined the operating segments based on the reports reviewed by the

strategic decision maker comprising the Board of Directors. The segmental information is split on

the basis of those same profit centres, however, management report only the contents of the

income statement and therefore no balance sheet information is provide on a segmental basis in

the following tables:

September 2014 Patisserie

Valerie

Druckers Baker &

Spice

Flour

Power

Philpotts Over-

head

As

reported

to the

CODM

Recon-

ciling

items *

Total

IFRS

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Revenue 51,075 12,224 4,230 2,631 6,226 255 76,641 - 76,641

Cost of sales (9,081) (3,106) (1,211) (221) (2,290) (1,454) (17,363) - (17,363)

Gross profit 41,994 9,118 3,019 2,410 3,936 (1,199) 59,278 - 59,278

Administrative

expenses

(30,506) (8,090) (1,903) (1,858) (2,997) (52) (45,401) 594 (44,812)

Depreciation and

amortisation

(2,501) (218) (70) (94) (219) (93) (3,195) - (3,195)

Finance expense (149) (30) - - - (679) (858) - (858)

Profit before

income tax

8,838 780 1,046 458 720 (2,023) 9,819 594 10,413

Income tax

expense

- - - - - (1,512) (1,512) - (1,512)

Profit for the

financial year

8,838 780 1,046 458 720 (3,535) 8,307 594 8,901

Non-current

assets

46,845 (154) 46,691

Current assets 14,963 - 14,963

Non-current

liabilities

(1,636) (110) (1,746)

Current liabilities (5,052) - (5,052)

Net assets 55,120 (264) 54,856

Capital

expenditure

9,917 - 9,917

* The reconciling items relate to year-end adjustments to goodwill and reclassification for statutory

reporting purposes and exceptional items. Revenue within overheads relates to income received

centrally which is not allocated to individual operating segments.

Segmental operating profit excludes costs relating to central services provided by our Operations, IT,

Marketing, HR and Finance Team and our Board of Directors All of the Group's revenue from

continuing operations has been generated from UK operations. The Group does not have any

customers whom account for more than 10% of external revenue.

4. Earnings before interest, tax, depreciation and amortisation (EBITDA)

2014 2013

£’000 £’000

Operating profit 11,271 9,585

Depreciation 3,195 2,459

EBITDA 14,466 12,044

Exceptional costs 858 -

Adjusted EBITDA 15,324 12,044

5. Taxation

2014 2013

£’000 £’000

Current tax:

UK corporation tax at rates: 2014 – 22.0%, 2013-23.5% 1,126 1,024

Prior period adjustment (37) 192

1,089 1,216

Deferred tax:

Origination and reversal of temporary differences 423 211

Tax for the period 1,512 1,427

Factors affecting current tax charge:

The tax assessed on the profit for the period is different to the standard rate of corporation tax in the

UK. The differences are explained below:

2014 2013

£’000 £’000

Profit before income tax 10,413 8,229

Profit for the year multiplied by the standard rate of corporation

tax

2,291

1,934

Expenses not deductible for tax purposes (752) (206)

Differences between capital allowances and depreciation (44) -

Adjustment in respect of prior periods (37) 192

Utilisation of tax losses - -

Income not deducted for tax purposes - (826)

Origination and reversal of timing differences (17) 211

Other 71 122

1,512 1,427

6. Property, Plant and Equipment

Freehold

land and

buildings

Leasehold

property

improvements

Plant,

equipment,

fixtures

and fittings

Motor

vehicles

Total

£’000 £’000 £’000 £’000 £’000

Cost

At 1 October 2012 1,798 9,953 24,329 73 36,153

Additions - 1,018 5,127 - 6,145

Assets acquired at acquisition - 176 237 - 413

At 30 September 2013 1,798 11,147 29,693 73 42,711

Additions - 793 6,239 - 7,032

Assets acquired at acquisition - 1,997 848 40 2,885

At 30 September 2014 1,798 13,937 36,780 113 52,628

Depreciation

At 1 October 2012 195 3,211 14,707 68 18,180

Charge for the year 17 588 1,850 4 2,459

At 30 September 2013 213 3,799 16,555 72 20,639

Charge for the year 16 746 2,424 9 3,195

At 30 September 2014 229 4,545 18,979 81 23,834

Net book values

At 30 September 2013 1,587 7,348 13,137 1 22,073

At 30 September 2014 1,569 9,392 17,801 32 28,794

7. Business Combinations

On 28 February 2014 the Group acquired 100 per cent of the outstanding ordinary share capital and

obtained control of Philpotts (Holdings) Limited, a sandwich and salad retailer with 23 shops in the

UK. As a result of the acquisition, the Group has extended its presence in the casual dining market

and also expects to reduce costs through economies of scale.

The acquisition details as at 30 September 2014 are stated below. The reference to provisional

values refers to the amounts included within the half yearly results as disclosed in the Admission

Document on listing on AIM.

Mar 14 Sept 14

£’000 Adjustments

to

provisional

values

£’000

Fair value of consideration transferred:

Total cost of acquisition 6,334 - 6,334

Less acquisition expenses charged to the consolidated

statement of comprehensive income

- (265) (265)

Less post acquisition obligation (2,203) - (2,203)

Amounts settled in cash 4,131 (265) 3,866

Recognised amounts of identifiable net assets:

Intangible asset – brand - 500 500

Property, plant and equipment 3,074 (189) 2,885

Inventory 113 - 113

Trade receivables 318 - 318

Prepayments 125 - 125

Other assets 115 - 115

Liabilities (1,515) (110) (1,625)

Bank Loans (2,203) - (2,203)

Identifiable net assets 27 201 228

Goodwill on acquisition 4,104 (466) 3,638

In addition to the amount settled in cash of £3,866k, the Group was required to repay the bank loan of

£2,203k as a post completion obligation.

The adjustment to property, plant and equipment primarily relates to the revaluation of a property in

Darlington.

The goodwill arising of £3.6m from the acquisition consists largely of the synergies and economies of

scale expected from combining the operations of the Group and Philpotts. None of the goodwill

recognised is expected to be deductible for income tax purposes. A brand value has been recognised

to reflect the value of customer relationships and the trading name. This has been valued using a

royalty free model across a ten year period. No other intangibles, such as customer contracts, were

identified.

The revenue included in the consolidated statement of comprehensive income since 28 February

2014 contributed by Philpotts Limited was £6.3m. Philpotts also contributed profit of £0.5m over the

same period. Had Phillpotts been consolidated from 1 October 2013, the consolidated statement of

comprehensive income would have shown revenue of £80.6m and profit after tax of £9.1m.

The Financial Statements for the 12 months ended 30 September 2014 will be posted to shareholders

and laid before the Company at the Annual General Meeting; this will be held on 30th January 2015 at

12.30pm at Patisserie Valerie Spitalfields, 37 Brushfield Street London E1 6AA.

Copies of The Financial Statements will be available from the Company Secretary at Patisserie Holdings PLC, 146-156 Sarehole Road, Birmingham, B28 8DT or from the Company’s website https://www.patisserie-valerie.co.uk.