Clapham House

Interim results from Clapham House, the firm led by proven restaurateur David Page, show profits up 339% to £1.2m on sales up 140% to £20.6m. 

Page is only part way through his five-year plan for domination of the UK restaurant market and the rate of expansion is accelerating: ‘You open five in the first year, 12 the next, then 20 in the third year and 30 in the fourth, so by the fifth year you’re able to open 50 new sites a year,’ he explains. That’s an exciting future for investors to look forward to.

In the six months to October, CPH increased its estate to 66, and expects to advance this to 72 by the year-end. The company then intends to open 20-25 the following financial year, all funded by internal cashflow. All four brands (Gourmet Burger Kitchen, Bombay Bicycle Club, Tootsies and Real Greek) are 'popular' and make cash ‘straight away’, Page confirms – apart from the Bicycle Club delivery kitchens, which ‘take three years but eventually provide the highest return on capital’ – so cashflow for the half-year was £1.7m compared to £0.6m for the whole of the previous financial year.

Of the Tootsies estate obtained as part of the £25m acquisition of Urban Dining at the start of the period, all will benefit from a new menu and seven have been refurbished, one converted to a GBK and one sold.

Independent broker Investec forecasts that the full year will produce £47.1m turnover, feeding through to £3.1m of pre-tax profit and 6.2p of earnings per share. This rises to £6.2m profits and 12.2p earnings for 2008. CPH’s forward rating of 43 times earnings for the full year therefore falls to a more palatable 22 the year after, but the rate of growth here is so impressive that the significance of these ratios is limited.

A Christmas pick in Growth Company Investor last year at 165p, the shares have been strong performers and are still worth picking up.