03 December 2007
Trading Update
The Company will announce its interim results for the six months ended 30 September 2007 on Wednesday 5 December, which will show adjusted profit before taxation of £1.5 million* (2006: £1.2 million*).
Whilst the Board still anticipates strong growth for the Company for the years ending March 2008 and 2009, this is expected to be significantly below its original expectations. This is a result of the following factors:
• The Board is concerned about the uncertain economic outlook, potential food cost inflation and recent increases in rents quoted for new properties and has therefore concluded that it is prudent to adopt a more conservative opening programme for the Group in the UK for the year ending March 2009. This will concentrate on the expansion of the Gourmet Burger Kitchen Limited (“GBK”) format in the UK and internationally under franchise. The Board now anticipates the opening of 18 new restaurants across all formats in the year to March 2009, of which 13 will be in the UK and 5 overseas. As a consequence the Board has substantially reduced its growth expectations for the year to March 2009.
• There has been at least a 12 month delay in the landlord releasing the sites for the Company to start building its GBK and The Real Greek restaurants in the Spitalfields development in London, which were expected to have contributed at least £0.5 million to this year’s operating profit. The Board now anticipates that these two restaurants are unlikely to open until well into the financial year to March 2009.
• The sales shortfall in Tootsies, as announced in the September AGM statement, has been exacerbated in recent weeks by poor sales at the eleven Tootsies restaurants located at shopping and leisure centres. These restaurants are normally the most profitable within the Tootsies estate so any sales shortfall has a disproportionate effect on profits. The Board attributes this to pressure on UK consumer spending which appears to be affecting these locations in particular. Whilst the Board has launched a number of initiatives to address this, including a new Tootsies menu, the trend is expected to continue into the new financial year. Consequently the Board expects the contribution this year from the Tootsies business to be significantly below original expectations.
• The Company’s interest charge will be approximately £0.2 million higher than anticipated due to higher LIBOR rates and the Company’s higher level of debt on account of the expected opening of 21 GBK restaurants in the UK in the year ending March 2008. The Board expects to report net debt at 30 September 2007 of £13.3 million.
A full update will be given with the Company’s announcement of its interim results on Wednesday 5 December.
David Page, Executive Chairman, commented
“Despite the current uncertain economic outlook, we remain positive about the medium-term demand trends for the UK eating out market, Clapham House’s formats and, in particular, the national roll out opportunity for GBK.”
* Profit before taxation, restructuring costs and share based payments
Enquiries
The Clapham House Group PLC 020 7357 9477
David Page, Executive Chairman
Paul Campbell, Chief Executive
Nick Wong, Group Finance Director
Noble & Company Limited 020 7763 2200
Nick Naylor
Hogarth Partnership Limited 020 7357 9477
Julian Walker
www.claphamhousegroup.com