Food & Drink Group looks for a partner
The Food & Drink Group (FDG) is shelving all "non-essential" capital expenditure for the time being and is looking for what it calls "a substantial corporate transaction".
The group, which operates Henry J Bean's restaurants and Jamies Wine Bars and announced its annual results today, warned investors it was "sub-scale" and that its current capital structure was "inappropriate for a more uncertain economic climate".
In looking for a deal, FDG said the "aim is to create a business of sufficient scale to cover its necessary central cost base more efficiently than the group is currently able to achieve".
The group had "successfully renegotiated" its banking facilities, while a further £2.5m-worth of funding had been made available, it added.
Current trading was "marginally below expectation to date", the group said, hit by weakening consumer confidence, although it pointed out it made most of its annual profits in the second half of the year.
FDG, which bought seven Puzzle Pub Company leases in April 2007, said trade had been strong in the first eight months of last year, but became "more challenging" in the final four months "as a result of poor weather limiting our ability to utilise our substantial outside trading space".
Lower than expected summer sales meant site operating costs as a percentage of sales were "adversely impacted", and overall site EBITDA dipped three per cent to £3.6m.
Overall turnover to September 29 2007 rose 2.4 per cent to £20.8m, operating profits fell 23 per cent to £1m, while pre-tax profits fell by a third to £600,000. Earnings per share fell from 18.8p to 8.8p.
FDG said it had successfully integrated the seven leasehold pubs it acquired from Puzzle Pub Company, while a range of refurbishments had been implemented across the estate.
However, those sites that had not seen investment for some time "began to show some sales decline in the second half of the financial year", and the group said it planned to correct this trend in the current trading period.
