No Pain, No Gain: Why I'm calling time on Food & Drink Group

These are sobering times for Food & Drink Group, which runs the Jamies watering holes in the City as well as the Henry J Bean's bars. Last year's results bitterly disappointed the stock market. Now it has admitted that the current year is unlikely to offer much solace.

The group seems to have suffered a number of misadventures. No wonder the shares have been subjected to a ferocious pounding. Its City reputation is in tatters and the possible merger or takeover chairman Stephen Thomas alluded to in January appears to be the only way FDG can escape its misery.

Thomas, who also heads the Luminar night-club chain, said the group was "sub-scale" and needed a "substantial corporate transaction". There is gossip, which has been denied, that he intends to take Luminar private. Maybe FDG could head that way, too.

The No Pain, No Gain portfolio alighted on the shares early last year. At that time the company seemed to be doing well. It appeared to have put its unfortunate past behind it and was expanding cautiously. The year's pre-tax profits had emerged at £928,000 and a maiden dividend paid.

The City confidently anticipated profits of more than £1m in the year ended September. And the shares hit 287.5p but then shaded as worries surfaced about consumer spending cutbacks.

Still, in October FDG said trading had been satisfactory with sales up 2.4 per cent and year's results would be in line with expectations. Then it all started to unravel. In December, the figures were delayed because finance director Urvashi Parekh was on compassionate leave. But profits would, confirmed the company, be in line with estimates.

It was, however, a further delay that really set alarm bells ringing. Suddenly it emerged that unexpected costs had been identified and profits would be around the £600,000 mark. In the event they came out at £561,000 (including property profits of £402,000) and, of course, the dividend was scrapped.

Last week came the hardest blow. "Worsening trading conditions" were taking their toll and although things were expected to improve, this year's profits would be "significantly below" stock market hopes which, at one time, were around £1.2m.

So what has gone wrong? The current year was bound to be difficult but it is last year's dismal performance that has caused dismay and seriously damaged the group's City reputation. From October to January, profits went from satisfactory to poor. Parekh has not returned from leave and has resigned. Stephen Smith has taken her place.

With redundancies an everyday fact of life in the City, the group's Jamies bars were clearly under threat in its current year. In the good times, Jamies and other chains increased their City exposure. Now they have fewer customers to tap and those still in work will not be quite so free spending as in the past. Even where job losses are not an influence, the general impact of the credit crisis is likely to hit FDG and other drink retailers.

At one time FDG was known as Hartford. It enjoyed quite a glamorous stock market run with some big-name backers. The portfolio scored when it bid successfully for one of its constituents, a restaurant company called Montana. Its then high-flying shares priced Montana at 340p a share. But the takeover heralded more difficult times. Its shares started a long decline. The portfolio managed to escape at 285p, achieving a £2,800 profit.

If it had accepted Hartford shares it would probably have suffered an even more wounding setback than it is now enduring.

Besides a change of name, FDG's revival included a massive consolidation with one share replacing no fewer than 136.

The shares are now around 32p compared with the portfolio's 241.5p buying price. I cannot, I feel, tolerate another laggard. The portfolio was caught out badly when Lennox shares were suspended and is suffering a substantial loss on Wyatt. So I have decided to wave a not-so-fond farewell to FDG, swallowing a rather unpalatable loss. I can only apologise to any investor who followed the portfolio into such a disastrous investment.

Indeed, the whole affair represents a double whammy. For the £2,800 profit so gleefully banked when Montana, a little Plus-traded company running American-style restaurants, was absorbed, has been comprehensively eliminated by FDG's performance.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Sport
The giant banner displayed by Legia Warsaw supporters last night
football Polish side was ejected from Champions League
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
News
i100(and it's got nothing to do with the Great British Bake Off)
PROMOTED VIDEO
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SAS Business Analyst - Credit Risk - Retail Banking

    £450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

    Project Manager - Pensions

    £32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

    KYC Analyst, Birmingham - £200-£250 p/d

    £200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

    Test Manager - Banking - Yorkshire - £450 per day

    £400 - £500 per day: Orgtel: Test Manager - Banking - West Yorkshire - £400-£5...

    Day In a Page

    Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

    The phoney war is over

    Russian troops and armour pour into Ukraine
    Potatoes could be off the menu as crop pests threaten UK

    Potatoes could be off the menu as crop pests threaten UK

    The world’s entire food system is under attack - and Britain is most at risk, according to a new study
    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
    From Mozart to Orson Welles: Creative geniuses who peaked too soon

    Creative geniuses who peaked too soon

    After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
    Caught in the crossfire of a cyber Cold War

    Caught in the crossfire of a cyber Cold War

    Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

    Salomé: A head for seduction

    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
    From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

    British Library celebrates all things Gothic

    Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
    The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

    Is the Hard Rock Café worth fighting for?

    The restaurant chain's owners are currently embroiled in a bitter legal dispute
    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

    In search of Caribbean soul food

    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
    11 best face powders

    11 best face powders

    Sweep away shiny skin with our pick of the best pressed and loose powder bases
    England vs Norway: Roy Hodgson's hands tied by exploding top flight

    Roy Hodgson's hands tied by exploding top flight

    Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
    Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

    Di Maria and Ronaldo: A tale of two Manchester United No 7s

    They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference
    America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

    America’s new apartheid

    Prosperous white districts are choosing to break away from black cities and go it alone