Clapham House Group

Clapham House grew its top line 4% to £44.5m in a tough year to March, as the restaurants group implemented '2 for 1' offers at its Gourmet Burger Kitchen outlets to drum up trade.

AIM-listed Clapham House owns two chains, Gourmet Burger Kitchen (GBK) and the smaller Greek food chain, The Real Greek. Whilst revenue at GBK grew 2% to £38m last year, the division's profit before tax reduced by 10% to £4.07m as two new restaurant openings and a number of voucher offers failed to produce the hoped for increase in operating profits. At group level, pre-tax profits actually rose by 50% to £1.5m, due to lower impairment and financing costs.

'We think we did well', explained Paul Campbell, CEO, 'as many people were predicting restaurants would go dead completely but we kept ours busy'. Despite ongoing market challenges, Campbell plans to grow the Gourmet Burger Kitchen concept further and aims to have 150 outlets up and running in the UK alone over the next few years. Openings are planned for Saudi Arabia this year and Clapham House recently announced a trial with Waitrose to begin selling GBK products.

Investment fund Capricorn Ventures speaks for 27% of Clapham House and also owns the UK branches of Nando's, a situation stoking excitement following news that an as yet unnamed bidder has now made an approach. With house broker Altium forecasting £46.8m sales and earnings of 2.5p for March 2011, Clapham House shares, which we said should be avoided a year ago at 67.5p, are trading on a very full-looking p/e of almost 29.

Nevertheless, given good work done by Clapham House in reducing debt and with the further bid excitement set to follow, the shares are now worth a speculation.