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Thu 18th Oct 2018 - Update: MPs call for Patisserie Holdings investigation, Domino's results
MPs call for Patisserie Holdings investigation, Gail’s sale ‘on hold’: Patisserie Holdings bosses could be hauled before parliament following the shock £40m black hole being uncovered in its accounts. Executive chairman Luke Johnson is facing calls to account for his governance of the business in parliament. Trading in the company’s shares has been suspended and chief financial officer Chris Marsh was arrested on suspicion of fraud following the discovery last week. The Serious Fraud Office has launched an investigation into what happened. Johnson has since struck a rescue deal with investors to plug the business with £20m – saving its 2,800 staff and 206 Patisserie Valerie cafes. But MPs said management could still be called upon to explain why it did not detect any warning signs. Labour MP Peter Kyle, a member of the business select committee, told the Daily Mail: “Patisserie Valerie’s situation only exemplifies the need for a wholesale look at how we ensure our companies get the right governance and the right external scrutiny, so that shareholders, customers and our broader economy can be reassured that best practice is being followed. We have mostly focused on the big firms so far, such as Carillion and the like, but Patisserie Valerie shows it is not just a problem that exists at big companies.” Grant Thornton, which has audited Patisserie Holdings since 2006, is facing civil legal action over why it failed to spot the problems. The accountancy firm could also face an investigation by the committee, with chairman Rachel Reeves, a Labour MP, saying the firm had serious questions to answer. The auditor pocketed £600,000 in fees in the past four years for its work with Patisserie Holdings. Reeves said: “The rising number of accounting failures undermines trust in business and it’s vital government and regulators take action to ensure that audits provide a true picture of the financial position of the firms they audit, not works of fiction. The audit industry is simply not fit for purpose. The government needs to quickly get a grip of the audit industry if we are to get audits that business, investors, and employees can believe in.” Meanwhile, Johnson’s plans to sell Gail’s Artisan Bakery have reportedly been delayed by Brexit. Last year the company was reported to be exploring options for fresh funding, including a possible sale that could have valued the company as high as £200m. Gail’s Bakery’s parent company Bread Holdings, backed by Johnson, had appointed KPMG to advise on sale options. The auction process was expected to get under way this year but plans have been halted until after the UK leaves the European Union in March 2019, reports the Press Association. Gail’s Bakery opened its first store in London in 2005 and has grown to nearly 40 outlets since Johnson’s investment in 2011.
Domino’s reports UK like-for-likes up 2.2%: Domino’s Pizza has reported UK like-for-like sales rose 2.2% in the 13 weeks to 30 September with full-year group underlying profit before tax expected to be “in the middle of the range” of market expectations. Group system sales were up 5.9% to £303.3m with UK system sales increasing 6.1%. It now has 1,236 stores group-wide – 23 new stores opened in the period, including 20 in the UK. Online sales in the UK were up 11.4% and represented 78.3% of total sales during the period. GPS is now live in 603 UK stores. The company has completed its £50m share repurchase programme with a further £25m of share buybacks to start immediately, taking year-end net debt into its 1.75 times to 2.5 times net debt/Ebitda target range. Chief executive David Wild said: “Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter. I’d like to thank our franchisees for their ongoing commitment to the development of the Domino’s brand, with the opening of a further 20 stores in the UK this quarter; we are confident of reaching 60 stores for the year. In our international operations, we are making good progress on refining the operating model and cost base, and we expect group underlying profit before tax for the 2018 year to be in the middle of the range of market expectations. In addition, given the strength of our balance sheet and the highly cash generative nature of the business, the board has approved a further £25m of share buybacks, to commence immediately.” Republic of Ireland system sales grew 5.2% on a constant currency basis, with like-for-like sales up 3.3%. The company opened its 50th store in the country during the period. In its international markets, Switzerland achieved constant currency system sales growth of 4.6%, with like-for-likes down 2.7%. In Iceland, constant currency system sales were up 4.6%, and like-for-like sales up 0.6%. In Norway, system sales growth was 125.5%, with like-for-likes down 3.1%. In Sweden, constant currency system sales increased 69.9%. In Germany, the company said progress on the conversion of Hallo Pizza outlets has been “very positive and we continue to build nationwide scale under the Domino’s brand”.
Jollibee targeting 25-strong estate in Britain as it makes UK debut: Jollibee, the Philippines fast food group, is targeting 25 sites in Britain as it opens its debut UK store. The company has opened the site in London’s Earl’s Court having secured a former Wagamama unit earlier this year. Jollibee, which offers single plates combining fried chicken, tomato spaghetti, beef with gravy and rice, has plans for rapid expansion across Europe. Global chief executive Ernesto Tanmantiong told The Daily Telegraph Jollibee was targeting 25 stores in Britain and 50 across Europe over the next five years. He said: “We see the UK has a very big fried chicken market.” Jollibee Foods Corporation is a $5.2bn market cap company headquartered in Manila. It operates 14 brands across 4,300 outlets worldwide. It is the sixth biggest food service company in the US by virtue of its controlling stake in Smashburger. In September last year it made a $1bn approach for Pret A Manger. The company’s flagship brand is Jollibee itself, which has 1,200 stores. Meanwhile, Tanmantiong shrugged off growing concerns over healthy eating. “We are looking into that as well,” he said. “But customers come to Jollibee for the ‘Chickenjoy’.”
Peel Hotels reports Ebitda down 42%: Peel Hotels has reported turnover fell 6.4% to £8,096,128 in the 28 weeks ended 12 August 2018, compared with £8,648,145 the previous year. Ebitda decreased 42.0% to £649,534, compared with £1,119,749 the year before. Profit before tax was down to £8,972, compared with £319,293 the previous year. Revpar decreased 3.1%, occupancy was down 6.4% while average room rate was up 3.5%. Chairman Robert Peel said: “The comparative shortfall in Ebitda in the first three periods will be difficult to make up by the end of the financial year. However sales have now stabilised and for the first time in many periods increased in the current period, ended 7 October 2018. Ebitda is broadly neutral from a comparative point of view over the past three periods to 7 October 2018. If we can consistently achieve increases in sales, our profits will quickly return to growth. We have recently signed up a marketing agreement with Best Western Hotels and hope to derive additional sales benefit from this partnership going forward.”

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