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Taste Holdings earnings up 29%

Johannesburg - AltX-listed consumer brand holding group Taste Holdings (TAS) on Thursday reported a 29% increase to 3.1c in headline earnings per share in the six months ended August 31 compared to 2.4c in the comparable period last year.

In line with group's policy, no dividend was declared. The group lifted revenue by 40% to R15m while earnings per share surged 50% to 3.6c.

The group's primary business is the franchising of the Scooters Pizza and Maxi's brands. Taste was formally known as Scooters Pizza (Pty) Limited.

Scooters Pizza, the group's pizza delivery brand, continued to experience exceptional year growth in the same store sales with demand from franchisees for new outlets enabling brand to make substantial market share gains in the last 12 months, through penetrating new markets and share gains in existing markets, the group said.

It added that particularly promising was the demand for new outlets from existing franchisees, demonstrating the confidence in the brand and business model.

'Aggressive new product pipeline'

In the 6 months under review, 16 new Scooters Pizza outlets were added and total system sales increased by 46% for the period, accelerating to 59% in August.

This increase was a result of new outlets added and an organic growth increase in like for like sales of 17%, well ahead of the approximately 3% inflationary price increases.

Taste said its 13-year-old Maxi's brand was undergoing a revamp to remain relevant to consumers within the growing demand for out of home consumption.

"An aggressive new product pipeline; an improved menu offering; and a next generation store launched in April 2006, have positioned the brand as a contemporary casual dining destination for aspirational value conscious families," it said.

Duncan Crosson, Taste Holdings' chief financial officer, said: "We expect a strong performance in the second half of the year due to the traditional seasonal increase in consumer spending over the festive season.

"The better-than-expected growth so far this year has increased the marketing funds for the brands in the second half of the year.

"Additionally, the group's target of 30 new outlets for the year will be exceeded given that 22 outlets have already been opened in the first six months of the year, and that there are a further 35 prepaid and approved franchisees awaiting sites around the country."

Pure franchise model

He said the group had moved to a pure franchise model, which required less capital to fund future organic growth.

Combined with the strong cash flows generated by the franchising model, the growth prospects should translate into solid earnings growth for shareholders.

Looking ahead, Crosson said that the group's aggressive strategy to acquire key sites in regional centres was paying off, with the first of these scheduled to open before the festive season.

Numerous opportunities still existed for consolidation within the sector, as well as for the acquisition of further brands that fell within the core competencies of management.

The group's strong cash situation positioned it favourably to acquire these brands, he said, thereby unlocking value for customers and shareholders through acquisitive and organic growth.

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