SME Group PLC, the Ruislip-based group whose profile lists KFC, Pizza Hut and Costa restaurants, has reported a sharp jump in annual profit. Almost all of it comes from a rise in the value of its investment properties, while sales were broadly unchanged.
In accounts approved on 30 September 2026 for the year to 31 March, the group reported a profit after tax of about £32m, up from under £4m a year earlier. Turnover barely moved, at around £90m. The gap between those two trends is the story.
A property gain, not a trading surge
The accounts record a fair value gain of about £35m on investment properties, compared with none the year before. Under the accounting rules the group follows, investment property is revalued each year and any change goes straight into profit. On the balance sheet, the value of those properties has more than doubled.
That is an accounting entry, not money in the bank. It lifts reported profit and the group’s net worth, but it does not by itself pay anyone or fund anything. The directors say the market value of the properties is not materially different from the figures in the accounts.
Good to know: what a fair value gain is
A fair value gain means a property is now worth more on paper than the last time it was valued. It becomes real money only if the property is sold. Without the gain, profit before tax would have been roughly £8m, still up from about £5m, based on the filed figures.
What the day-to-day business shows
Underneath the revaluation, the picture is steady and modestly better. Restaurants bring in almost all of the group’s sales, while the hotel side is smaller and slipped slightly, a weighting towards the fast food brands recruiting UK operators rather than towards hospitality.Profit margins on sales improved a little, and overheads eased.
Cash tells a similar story. The cash the business generated from its operations rose by about half, and the group ended the year with roughly £30m at the bank, up from around £18m. Shareholders received a dividend of about £2m, several times the previous year’s payout.
What the directors say
The strategic report calls the results “satisfactory” and describes the outlook for 2027 as “reasonably encouraging”. It also describes a restructuring during the year, in which a new Isle of Man holding company took over the shares in the group’s parent. The tax bill on the revaluation is largely deferred rather than paid now.
The brands behind the figures
The accounts refer to standards set by “the franchisors” and to donations to the KFC Foundation. A company profile on The Org says the group operates the KFC and Pizza Hut brands under franchise licence, runs Costa Coffee, and owns Comfort Inn and Holiday Inn hotels. The filing does not give restaurant numbers or sales by brand, and the Costa operating model is not verified here, since no UK register records which outlets are franchised, unlike the terms published by brands recruiting operators in the UK.
