Taste Holdings has released its full year results for the year ended 28 February 2014. Taste currently holds a market cap of R780 million, with a PE ratio of 26.21 and a dividend yield of 1.34%. The share price dropped significantly on news yesterday that the group had received a legal challenge on the validity of its agreement with Domino’s Pizza.
In April 2014 Taste signed an exclusive franchise agreement to develop the global Domino’s Pizza brand in South Africa and six other countries. Through the conversion and consolidation of Scooters Pizza and St Elmo’s stores to Domino’s Pizza stores; the opening of new Domino’s Pizza outlets; and the investment by both Taste and Domino’s Pizza; Taste plans to, in the next five years, establish Domino’s Pizza as the leading pizza delivery brand in Southern Africa.
Highlights from the results:
- Revenue up 15% to R582.7 million
- EBITDA up 17% to R60.6 million
- Earnings after tax up 23% to R30.3 million
- Headline earnings per share up 20% to 16.0 cents
- Normalised headline earnings per share up 12% to 16.9 cents
- System-wide sales up 7.2% to R1.48 billion
- Dividend up 22% to 6.2 cents per share
A comment extracted form the report discusses the group’s prospects, “The group’s exposure to a diversified customer base, combined with multiple sources of revenue and profit due to its extensive vertical integration, provides a balanced portfolio that is resilient to localised consumer contractions such as that currently being experienced among lower income consumers.
Taste has historically been cautious in its future outlook, especially with regard to forecasting factors beyond its direct control. While sales in our two pizza brands have shown positive sales growth in the most recent six months, demand among lower income consumers remains weak and we
anticipate that this will continue through the first half of the current financial year, potentially offsetting gains made in our pizza division. With regard to those factors within its control: the group is encouraged by the medium and long-term benefits the Domino’s Pizza roll-out and conversion will
bring. As communicated in prior announcements, this will however require initial once-off costs relating to the store conversions, establishment of a centralised dough production facility and initial training and marketing.
It is anticipated that the food services business will continue its improvement and that the jewellery division will increase its corporate-owned store base.
Taste remains committed to being a diversified franchisor invested in retail and restaurant brands within Southern Africa. The increased human resource capacity as a result of the re-structure in the food division will see the group continuing to assess opportunities in line with its strategic intent, particularly within the food division.”
For the full report, Click Here
