Multi-brand restaurant group Clapham House, which foresaw a sustained economic downturn on the horizon back in December and curtailed its previously rapid growth plans, has issued stronger results than it seems the market was expecting.

In the year to 25 March, restaurant openings across its four brands – Gourmet Burger Kitchen (GBK), Tootsies, the Bombay Bicycle Club and the Real Greek – lifted the group total to 96 restaurants, hoisting revenues 30% higher to £59.5m and profits to £4.7m before tax and exceptionals. However, growth this year will be less impressive as the roll-out will be much slower, confirms chief executive Paul Campbell, who says the plan is to roll out ten to 13 new outlets.

Trading is ‘satisfactory’ but the outlook is cautious and Campbell stresses that, as well as slowing down expansion, ‘we’re concentrating on controlling costs and doing all we can to promote sales’. A total of £9.2m of cash was generated last year and the store roll-out is all being funded from this.

‘Capex is controllable,’ reminds Campbell, ‘and we think the expansion plan at the moment is right for this stage in the economic cycle. Looking forward, we see next year looking the same, but if conditions improve we can ramp up the pace again.’ Last year, net debt rose 68% to £16m, but £21.7m of unused overdraft facilities still remain for such a purpose.

Backed here at 165p in 2005, the shares soared to over £4 by last summer, before slipping in December when the company flagged up its more conservative strategy. Although the company seems to be paddling quite furiously to maintain its progress and the economy is turning down, Clapham House is a well-managed operator and its current valuation is undemanding. The shares are worth holding long-term.

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The Clapham House Group	AIM	£36.26m	99.00p	0.00p
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