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Fulham Shore shares sink in early deals as results reveal site write-downs

As the restauranteur decided to shut an underperforming site in Brighton Marina, it has re-evaluated its portfolio of Franco Manca and The Real Greek brand sites
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It is closing an underperforming Franco Manca pizzeria in Brighton Marina

Restauranteur Fulham Shore PLC (LON:FUL) shares shed more than 8% in Tuesday’s early deals after its full-year financial results revealed the impacts of property devaluations and unsuccessful sites.

The company, which operates the Franco Manca and The Real Greek brands, detailed £867,000 of impairments following the disappointment of a Franco Manca restaurant in Brighton Marina which failed to perform to expectations.

It is planned that the Brighton Marina restaurant will close later this year, and the company has now agreed to surrender the lease to the landlord.

Also during the reporting period, the company closed the only site under a third brand, a Bukowski franchise, recognising a £400,000 loss on its investment following the sale of £300,000 of lease and contents.

Fulham Shore told investors that it was now taking a cautious view of its property values and have written down the carrying value of three underperforming sites, resulting in a £900,000 impairment – of which, £500,000 relates to Brighton Marina.

Taking an overview of the restaurant market, the company described a structural imbalance exacerbated by the impacts of Brexit, fragile consumer confidence and inflationary pressures in the UK.

Nonetheless, it added: “Despite this backdrop, it has been a year of growth and strategic progress for the group. 

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“We believe that this demonstrates that Fulham Shore is well placed to ride out the UK economic turbulence as a dynamic operator with strong and popular businesses and a good portfolio of sites.”

In terms of the financial results, the company reported higher revenues at £54.69mln from £40.44mln in the preceding year, albeit the group’s operating profit narrowing markedly to £150,000 from £1.5mln in 2017 and it recorded a £150,000 loss after tax.

It presented a ‘headline earnings’ (EBITDA) figure of £7.43mln, up from £7.27mln.

Net debt stood at £11.99mln as at March 25, up from £5.9mln a year before.

The company opened a total of 13 new restaurants during the year, nine Franco Manca pizzeria and four Real Greek sites, and two further Franco Manca restaurants were opened in the current financial year (one in Bath and one in Cambridge).

It also described “encouraging” first-quarter sales for both restaurant brands whilst highlighting that further expansion will be approached with caution.

“Despite the growth we have reported and our positive first quarter in the current financial year, the remainder of the financial year is difficult to predict. Costs will, in all likelihood, continue to rise but maybe not as much as they did during the past financial year,” the company said.

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