Sfinks forecasts net profit of PLN 30.2 m in 2020

Thursday, December 11, 2014 - 15:07

Sfinks Polska, the owner of the chain of restaurants: Sphinx, Chłopskie Jadło and WOOK, published its strategy for 2015-2020 which assumes a systematic improvement of the company's performance within 6 years and reaching the sales revenues of PLN 332 m in 2020. The company forecasts that in this period the net profit will increase to PLN 30.2 m. At the same time, in 2016, Sfinks plans on lowering its ratio of debt to EBITDA to 3.1 and reporting positive equity. The company estimates that in four quarters of this year its revenue will increase to 16.6% YoY and reach PLN 164.6 m, while the net profit, following the expected release of provisions, will increase to PLN 13.8 m. In accordance with Sfinks' strategy, acquisition of a casual dining, pizza or cafe chain with a well-known brand is possible as well as launching a master franchise Sphinx chain in at least 3 countries.

The situation of the company has been put in order, and the new operating standards implemented in many fields proved their efficiency, so we can say that our operations as foreseeable and ready for further growth. Therefore, we decided to present detailed assumptions concerning the development of our business over the next few years, comments Sylwester Cacek, the President of the Management Board of Sfinks Polska SA.

Our strategy assumes a twofold increase of sales reported in 2013 within the next 6 years, in particular, a dynamic growth of sales is expected to take place in 2015-2016, when we plan to open at least 30 restaurants. This derives from the fact that we have signed more than a dozen contracts for the launch of new restaurants in very good locations during this period, and more contracts are at the advanced stage of negotiations. We want to use the circumstances on the market that favour lessees in order to capitalize on them in the years to come. However, we do not rule out that as a result we will need additional funding for investment. This concerns, in particular, the opportunity to open more restaurants. We have recognized our options and started talks aiming at increasing the investment potential without the need to increase the capital. As a last resort, we will issue convertible shares or bonds. We also assume that as part of investment we will engage exclusively in those projects which are sure to render a return of at least 30%, adds Sylwester Cacek.

In line with the assumptions of the new strategy, the development of the company is to be driven by Sphinx restaurants operating based on operator and franchise models. The company plans on generating the EBITDA at the level of at least 20% of the revenue in the case of own restaurants and 7% in the case of franchise restaurants. Master franchise model will also be implemented for the Sphinx concept, which should be binding on three foreign markets over the period of the strategy. Sfinks also wishes to further develop Chłopskie Jadło and WOOK restaurants as a result of which they will rank second and third largest casual dining restaurants in Poland. In the meantime, Sfinks will work on obtaining investors for these chains.

Sphinx is the largest in Poland gastronomic chain in the casual dining sector and, as confirmed by the current polls, the strongest Polish gastronomic brand. It is our strategic asset generating the biggest growth and profitability, so naturally most of our attention is focused on the development of the chain. We know it is the right move and we will continue to go in this direction. However, our remaining concepts - Chłopskie Jadło and WOOK - have huge potential as well. We do not preclude that both chains will be developed as separate entities with dedicated teams which will focus solely on those brands. Decisions have already been made whereby all WOOK restaurants will be transferred to Shanghai Express, and in the future also the Chłopskie Jadło restaurants may be moved to a separate entity. We will also try to obtain an investor for this chain, explains Sylwester Cacek.

One of the strategic targets of Sfinks for the next years with respect to the development of the chain is also the acquisition of a casual dining, pizza or cafe brand. The acquisition may be completed with the view to creating another, besides Sphinx, strategic chain, if the purchased entity's brand is strong enough, has wide reach and high potential of international development. Sfinks also considers acquiring gastronomic chains, developing or restructuring them, and then reselling them with an appropriate rate of return.

We constantly monitor the market, conduct many talks. One thing is for sure - each offer will be carefully considered in terms of its actual impact not only on the income, but also on the profitability of the company. In our opinion, Sfinks has unique, compared to other entities on the Polish market, abilities of developing the chain, which together with the barriers of entry for foreign companies, gives us the opportunity to generate an additional profit. We expect that in the future big foreign gastronomic chains will be interested in expanding their operations in our country, in which circumstances acquisition is always the preferred option to building a chain from scratch. We can gain a lot if by that time we have valuable assets to sell, notes the President of Sfinks.

The forecasts presented by Sfinks Polska in its strategy for 2015-2020 do not include the performance of franchise restaurants and restaurants operating within master franchise, the result of acquisition of other chains, development of e-commerce sales and catering, as well as development of the companies managing the WOOK and Chłopskie Jadło restaurants. The forecasts do not account for capital injection which may become necessary in the face of the lack of means to obtain funding for the planned investment projects. On the other hand, the forecasts include the impact on the performance of one-off events resulting from the past, such as the reversal of provision for the Chłopskie Jadło trademark, setting up a tax asset related to the losses in the previous years, valuation of the Shanghai Express shares.

Thu, 2014-12-11