No Pain, No Gain: Why I'm calling time on Food & Drink Group
Saturday 26 April 2008
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
- 1 'Not suppost to cry': 9-year-old lists the worst things about being a boy
- 2 Lee Evans announces his retirement from comedy on The Jonathan Ross Show
- 3 Iggy Azalea responds to Eminem rape lyrics: 'I'm bored of old men threatening young women'
- 4 These grandmas smoking weed for the first time are wonderful
- 5 Pastafarian former porn star Asia Lemmon allowed to wear colander in driving licence photo
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Muslims pre-date Columbus in discovering America,' says Turkish president Erdogan
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Former Tory PM Sir John Major says 'we would not have an NHS without migrants'
Revealed: How the world gets rich – from privatising British public services
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens